Trustmark settles Stanford Financial lawsuit for $100M
Jan. 30—Trustmark's $100 million settlement in a long-running lawsuit involving the Stanford Financial Group Ponzi scheme cut deeply into the bank's quarterly earnings, it reported last week.
The Jackson-based bank said it lost $34.1 million in the fourth quarter due to a $100.75 million charge it took to settle the lawsuit filed in 2009. Trustmark said the settlement eliminates risk, ongoing expense and uncertainty.
The $17.2 billion-asset bank did not admit or deny wrongdoing in connection with the settlement.
While Stanford Financial Group was masterminded by Texas native R. Allen Stanford, the company also had ties to Northeast Mississippi. Former Stanford chief financial officer James Davis and chief investment officer Laura Pendergest-Holt, who both were convicted and served time for the roles, were from Baldwyn and had their offices in Tupelo.
All of the company's offices worldwide were raided and closed in early 2009 following the revelation of the scheme that defrauded $7.2 billion from some 18,000 investors worldwide — including several thousand in Mississippi.
Stanford is serving a 110-year prison sentence following his 2012 conviction for running the Ponzi scheme.
Trustmark was among five financial institutions, including HSBC, TD Bank and Societe Generale, that faced a lawsuit set to go to trial Feb. 27 in Texas. The lawsuit was seeking to recover alleged fraudulent transfers and damages. But Trustmark chose to settle the lawsuit, which still needs court approval.
Duane Dewey, the president and CEO of Trustmark, said the settlement was in the best interest of the bank and "will resolve all current and potential future claims relating to litigation involving the Stanford Financial Group that began in 2009."
With the settlement and the charge, Trustmark had its fourth quarter net income reduced by $75.6 million or $1.24 per diluted share. For the full year, Trustmark's net income totaled $71.9 million, or diluted earnings per share of $1.17. Without the litigation settlement expense, Trustmark's net income in the fourth quarter totaled $41.5 million, or 68 cents per diluted share, while full year earnings were $147.5 million, or diluted earnings per share of $2.40.
