An arbitration panel for the Financial Industry Regulatory Authority (“FINRA”) has entered a $1.4 million award against Pershing, LLC for its role as a custodian and clearing firm in the R. Allen Stanford Ponzi Scheme, the second-largest investor fraud in US history.

The claim was filed by a group of investors who invested in CDs issued by Mr. Stanford’s off-shore bank and claimed that Pershing “aided and abetted” Mr. Stanford by acting as his custodian and clearing fund and by wiring hundreds of millions of dollars to his bank in Antigua and other controlled accounts in the U.S., Canada, and Great Britain.

The claimants alleged Pershing aided and abetted common law fraud, breached its fiduciary duties towards them, acted negligently, breached its contracts with the claimants, laundered money, employed manipulative, deceptive, and fraudulent devices in furtherance of the scheme, violated its duties of commercial honor and fair trade, negligently supervised Pershing employees, and engaged in a civil conspiracy to defraud.

A panel of FINRA arbitrators found in favor of six of the claimants, awarding a collective $1.43 million in compensatory damages based on findings that Pershing acted negligently. The panel also awarded reimbursement of the Claimants’ $750 filing fee.

If you or someone you know lost money as a client of Pershing, LLC due to unsuitable, misrepresented, or unauthorized transactions, please call the Frankowski Firm at 888.741.7503 or fill out this contact form.