The Toronto-based bank buying First Horizon agreed to pay $1.2 billion to settle claims tied to the Stanford Financial Group Ponzi scheme that cost investors more than $7 billion in 2009.

TD Bank Group agreed on Monday, Feb. 27, to make the payment to the Stanford Receivership Estate, which helps victims of Stanford Financial receive compensation. 

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“As has been the case throughout these proceedings, TD expressly denies any liability or wrongdoing with respect to the multi-year Ponzi scheme operated by Stanford and makes no admission in connection to any Stanford matter as part of the settlement,” TD said in a statement. 

First Horizon declined to comment. 

Stanford Financial Group was based in Houston and had corporate offices in Memphis. 

Allen Stanford, 72, who founded the financial company, is serving a 110-year federal prison sentence after being convicted in 2012 on fraud charges. 

At trial, prosecutors said Stanford knowingly sold billions of dollars worth of fraudulent certificates of deposit to an offshore bank in Antigua.

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The CDs ended up worthless because the bank did not have the assets to back them, and the deposits were not guaranteed by any federal bank insurance program.

TD was accused of collecting deposits from Stanford Financial, despite what banking regulators said should have raised concern. 

“TD provided primarily correspondent banking services to Stanford International Bank Limited and maintains that it acted properly at all times,” TD said in its statement. 

Before TD’s settlement, the French financial services company Societe Generale SA agreed to pay $157 million related to the case, and earlier this year Trustmark agreed to pay $100 million to settle claims of its involvement in the Ponzi scheme.

Five banks, which provided services to Stanford Financial over 20 years, have paid $1.6 billion to the receivership. The receiver had been preparing to go to trial with some of the banks.

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Previously, a Canadian court ruled in favor of TD, ruling the bank had no liability in the Stanford case. That ruling was affirmed by the Ontario Court of Appeals. That case is now pending in the Supreme Court of Canada.

“TD elected to settle the matter to avoid the distraction and uncertainty of continuing a long legal proceeding,” TD said. 

TD first announced in March 2022 its plans to buy First Horizon for more than $13 billion in an all-cash transaction.

In February, First Horizon said it had extended the date of the merger to May 27, due in part to U.S. regulatory oversight.

On Wednesday, March 1, First Horizon said it could miss the new deadline, again citing regulatory approvals. 

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“There can be no assurance that an extension will ultimately be agreed or that TD will satisfy all regulatory requirements so that the regulatory approvals required to complete the Pending TD Merger will be received,” First Horizon said in a filing with the U.S. Securities and Exchange Commission.

If approved, First Horizon would technically join TD Bank N.A., the U.S. subsidiary of Canada-based TD Bank Group.

TD has become the seventh-largest U.S. bank by deposits and is the 11th largest bank in the U.S. by total assets through a series of mergers and acquisitions similar to the one with First Horizon.

Following the merger, TD would have more than $600 billion in assets. 

Editor’s Note: The First Horizon Foundation has made grants to Memphis Fourth Estate, Inc., the nonprofit 501c(3) that owns and oversees The Daily Memphian.