“Hindsight is 20/20” says the Ontario Superior Court of Justice in dismissing lawsuits against TD Bank relating to the Stanford Ponzi scheme, a USD $7 billion fraud that spanned over 18 years.

In her June 8, 2021 judgment, the Honourable Madam Justice Conway concluded that TD Bank did not know or have any reason to suspect that Mr. Stanford was a fraudster who was operating a Ponzi scheme at the relevant time. Justice Conway consequently dismissed both actions advanced against TD Bank for knowing assistance in breach of fiduciary duty and negligence.

The actions brought

On March 6, 2012, Robert Allen Stanford, the former chairman of Stanford International Bank Limited (SIB), an offshore bank in Antigua and Barbuda (Antigua), was found guilty by a federal jury of operating a “massive Ponzi scheme” in which billions of dollars of investors’ money were misappropriated and financial records falsified. On June 14, 2012, Stanford was sentenced to 110 years in prison. As part of the global fallout of the Ponzi scheme, two actions were brought before the Ontario Superior Court of Justice against TD Bank in connection with its role as a US dollar correspondent bank for SIB.

As described by Justice Conway, correspondent banking involves the provision of services by the correspondent bank to another bank (the respondent bank) to facilitate the movement of funds, exchange of currencies and settlement of obligations. A correspondent bank effectively acts as an agent to process…

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