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Stanford class action suits could consolidate

Multiple class action lawsuits alleging that Willis aided financier Allen Stanford and the Stanford International Bank (SIB) in a $7bn Ponzi scheme could be merged after a court hearing due on 21 August.

Plaintiffs allege that Willis actively aided the scam - where more than 28,000 investors lost $7bn in an elaborate Ponzi scheme - by providing Stanford with letters that were then used to sell fraudulent certificates of deposit.

Willis' endorsement, the plaintiffs argued, reassured investors about the security of their investments by using vague details of the bank's insurance coverage.

The certificates said SIB had purchased directors' and officers' liability insurance and bankers' blanket bond insurance at Lloyd's.

According to a filing released at the end of July 2014, the court is now set to discuss how these cases should proceed, including whether or not there should be consolidation of certain lawsuits.

Willis's letters were allegedly provided by vice president of executive risk Amy Baranoucky, but were sanctioned by staff at Willis London.

Baranoucky, who was an employee of Willis North America and Willis Colorado, acted as a "middle man" between the bank and Willis London, the suit alleged.

But the plaintiffs, who include swindled investors from Venezuela and Mexico, claim the letters were written by Stanford staff and then printed and signed by Willis, which couriered the letters in bulk to be mailed out by Stanford employees based in Houston, Texas.

Describing the employees of Stanford's Antigua-based SIB as "first class business people", each letter also said the bank underwent a "stringent risk management review by an outside audit firm".

The impending court date follows the Supreme Court's decision to overturn a ruling from October 2011, when the District Court for the Northern District of Texas granted the dismissal of four similar complaints under the Securities Litigation Uniform Standards Act. This act precludes certain class actions lawsuits when a misrepresentation is made in connection with the purchase or sale of a covered security.

According to a statement in Willis' 10-Q filing for 30 June, the (re)insurance broker said that it was now facing 13 similar cases, adding that it "disputes these allegations and intends to defend itself vigorously against these actions".

Stanford - ranked number 205 on the Forbes Rich List in 2008 - was sentenced to 110 years in prison in 2012 after being found guilty of multiple counts of fraud and conspiracy.

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