A federal appeals court yesterday threw out a settlement requiring insurers to pay $65 million to a court-appointed receiver for companies once run by Allen Stanford, the Texas financier serving a 110-year prison term for running a large Ponzi scheme, Reuters reported. By a 3-0 vote, the 5th U.S. Circuit Court of Appeals said the judge who approved the accord lacked authority to void or release some claims against the insurers, including underwriters at Lloyd’s of London, and bar further legal challenges over their policies and Stanford’s companies. “The district court and receiver lacked authority to dispossess claimants of their legal rights to share in receivership assets for the sake of the greater good,” Circuit Judge Edith Jones wrote for the New Orleans-based appeals court. Ralph Janvey, the receiver, said in a May 22 letter to Sen. John Kennedy (R-La.) that he had recovered $573 million for Stanford’s victims since being appointed in 2009, and been authorized to pay out $232 million. The insurance settlement had drawn objections from former Stanford managers and employees seeking to obtain insurance coverage and press their own claims, and from former Stanford investors who sued brokers covered by the insurance policies. Monday’s decision returned the case to U.S. District Judge David Godbey in Dallas. Read more.
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