SEC v. Stanford International Bank, No. 17-11073 (5th Cir. 2019)Annotate this Case
The Fifth Circuit treated the Petition for Rehearing En Banc as a petition for panel rehearing, granted the petition, withdrew its prior opinions, and substituted the following opinions.
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 court held that the district court had subject matter jurisdiction over the Willis and BMB bar orders enjoining third-party investors' claims; the bar orders enjoining the investors' third-party claims fell well within the broad jurisdiction of the district court to protect the receivership res; and thus the district court did not abuse its discretion by entering the bar orders to effectuate and preserve the coordinating function of the receivership. The court also held that the bar orders negotiated here were legitimate exercises of the receiver's authority; 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 there was no illicit class settlement and the orders did not offend Federal Rule of Civil Procedure 23; objectors were not entitled to a jury trial; and the district court did not abuse its discretion in approving the BMB and Willis settlement agreements.
This opinion or order relates to an opinion or order originally issued on July 22, 2019.