TD Bank faces Ponzi scheme liquidators seeking $5.7B in trial

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TD Bank should be held liable for more than $5.7 billion Cdn of losses at the collapsed Antigua bank of former Texas financier Robert Allen Stanford, lawyers for its liquidators argued in an Ontario court on Monday.

The joint liquidators of Stanford International Bank (SIB) allege “negligence and knowing assistance” by TD, Canada’s second-biggest lender, in allowing SIB to maintain correspondent accounts, according to a statement filed with the Ontario Superior Court of Justice in 2019.

In earlier court filings, the plaintiffs had sought damages of $7 billion.

Stanford is serving a 110-year prison term after being convicted in 2012 of running a $9.2-billion Ponzi scheme.

Correspondent banking is the business of providing services to offshore financial institutions. The joint liquidators are Grant Thornton in the British Virgin Islands and the Cayman Islands. 

The plaintiffs allege that TD knew of the “extraordinary risks” from providing the services and that the bank was 
therefore “reckless.”

“Like everyone else, during the time that Stanford International Bank was a customer of TD, we had no knowledge of, and no reason to suspect, any fraudulent activity was taking place,” a TD spokesperson said. “TD is not responsible for the fraud committed by Allen Stanford.”

The trial is scheduled to last three months, a spokesperson for one of the plaintiffs’ lawyers said.

“If there was evidence sufficient to warrant criminal prosecution, TD would have been charged years ago,” said James  Shanahan, an analyst at Edward Jones. “A judgment or settlement of [more than] $500 million [US] would surprise the market.”

TD estimated reasonably possible losses from legal and regulatory actions including the Stanford litigation of between zero and $951 million Cdn as of Oct. 31. Provisions related to legal action will be taken when a loss becomes probable and an amount can be reliably estimated, it said in its 2020 annual report.

TD shares rose 0.3 per cent in Toronto on Monday in a generally down market.

In November, a Swiss court ordered Societe Generale SA to surrender $190 million deposited by Stanford, saying it had failed to do proper due diligence.



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