SEC v. Stanford International Bank, Ltd., No. 17-11073 (5th Cir. 2019)Annotate this Case
These consolidated cases stemmed from an SEC complaint against Robert Allen Stanford, the Stanford International Bank, and other Stanford entities, alleging a massive, ongoing fraud. The receiver subsequently filed suit against two of Stanford's insurance brokers as participants in the fraudulent scheme. The district court entered bar orders and approved settlements after the insurance brokers ultimately agreed to settle conditioned on bar orders enjoining related Ponzi-scheme suits filed against the brokers. Objectors appealed.
The Fifth Circuit affirmed the district court's judgment, holding that the district court had subject matter jurisdiction to enjoin third party investors' claims in order to effectuate and preserve the coordinating function of the receivership. The court also held that the bar orders did not violate the Anti-Injunction Act where they prevented Florida and Texas state-court proceedings from interfering with the res in custody of the federal district court and aided the district court's jurisdiction over the receivership entities. Finally, the court held that objectors were not deprived of due process; rejected objectors' contention that the settlement agreements and bar orders were de facto class settlements; held that a right to a jury does not create a right to proceed outside the receivership proceeding; and held that the district court did not abuse its discretion in approving the settlement agreements.
The court issued a subsequent related opinion or order on December 19, 2019.