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Supreme Court to Hear Appeals of Chadbourne & Parke and Proskauer Rose in Allen Stanford Matter
On Friday, the U.S. Supreme Court accepted the appeals of law firms Chadbourne & Parke and Proskauer Rose rising from the decision of the 5th U.S. Circuit Court of Appeals in reviving cases against the law firms brought by victims of Allen Stanford. Victims of Stanford’s $7 billion Ponzi scheme had sued the New York based law firms as well as attorney Thomas Sjoblom, who worked at both the law firms.
The lawsuits claimed that Sjoblom, as well as Chadbourne & Parke, had obstructed a SEC probe into Stanford’s doings. The victims also sued insurance brokerage Wilis Group Holdings Plc for its role in the fraud committed by Stanford.
The defendants argued that SLUSA or the federal Securities Litigation Uniform Standards Act precluded state-law class actions involving issues in connection with the purchase or sale of covered securities. Siding with the defendants, in October 2011, Dallas federal judge David Godbey had ruled that the SLUSA preempted the state-law class action brought against the defendants by the victims of Stanford’s scheme.
However, with the 5th U.S. Circuit reviving the cases, the law firms approached the U.S. Supreme Court in appeal. The law firms argue that lower courts are divided in their opinions in the issue, and that similar lawsuits in Bernard Madoff’s Ponzi scheme had been barred by SLUSA.
Stanford is currently serving a 110-year prison sentence following the bust of his scheme involving the sale of certificates of deposit by his Antigua-based Stanford International Bank.
The Supreme Court is expected to hear the appeals in April.
The cases are Chadbourne & Parke LLP v. Troice et al, U.S. Supreme Court. No. 12-79; Willis of Colorado Inc et al v. Troice et al, U.S. Supreme Court, No. 12-86; and Proskauer Rose LLP v. Troice et al, U.S. Supreme Court, No. 12-88.