Class action vs. PERSHING LLC, and LOCKWOOD ADVISORS, INC.
February 16, 2011
Calling it the best chance for some investors to recover some of the money they lost in R. Allen Stanford's certificates of deposit, attorneys have
sued a clearing broker-dealer for the disgraced financier.
The suit alleges that New Jersey-based
brokerage firm Pershing LLC — a subsidiary of the Bank of New York Mellon Corp. — dealt in unregistered securities.
Pershing acted as a middleman between Stanford's Antiguan bank and investors who bought billions of dollars' worth of CDs that federal prosecutors say
were bogus.
A similar suit was filed in Dallas federal court on December 08, 2009. Austin residents Susan Blount and Gary and Laurie Spellman are among the
plaintiffs in the lawsuit, for which class action status is being sought.
"I feel this is the very best claim that has a chance of recovery" for Stanford investors, said the plaintiffs' lawyer, Joseph Brophy, a partner with
Hohmann, Taube & Summers LLP in Austin.
In court documents, John Ward, managing director for Pershing's global services business, estimated that more than $500 million flowed through Pershing,
starting in 2006. The number of investors during that time isn't yet known, but Ward estimated that more than 1,600 transactions took place.
Brophy said the Stanford CDs qualified as securities under the Texas Securities Act and should have been registered.
Pershing should have been "acutely aware" of that fact, he said, adding that under state securities law, investors are entitled to get their money
back.
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