Stanford lawsuit seeks restitution from state

The class-action lawsuit filed by Stanford victims seeks restitution from the state Office of Financial Institutions, clearing broker SEI and the Stanford Trust Company. The suit, filed by Baton Rouge attorney Phil Preis on behalf of 86 victims, claims all parties contributed to the sale of the Stanford International Bank certificate of deposits that were the cause of a Securities and Exchange Commission seizure of Stanford Financial Group and its subsidiaries in February. What makes this suit unique among others previously filed on behalf of Stanford victims is that the suit alleges that OFI knew there was a liquidity crisis at Stanford, it had ordered the trust cease the sale of the CDs and divest itself of the CDs entirely in 2007 and 2008. The fact that the OFI did not notify the public of its actions or prevent the trust from continuing to sell the CDs makes them liable, according to Preis. The other unique factor is that because Louisiana does not have sovereign immunity, Stanford victims can sue the state for restitution of up to $500,000 per person. Because the suit claims SEI is a negligent participant in the sale of the CDs and the propagation of false information regarding their worth, it could also be held liable and could be made to provide restitution to U.S.-based Stanford victims who were clients of the Trust and had SEI serve as a custodian of their CDs. A voice mail at SEI’s press office indicated they were unavailable until Aug. 24. OFI’s General Counsel Sue Rouprich declined to comment on the suit saying that the agency typically will not discuss pending litigation. To read the full suit, click here.—Olivia Watkins