LITIGATION ALERT: Recent Trends in Ponzi Scheme Litigation

In the wake of massive Ponzi schemes such as those operated by Bernard Madoff and Allen Stanford, financial services companies face increased litigation risks for their roles in these schemes.  Since the credit crisis began, Ponzi scheme litigation has been on the rise.  From 2007 through the first half of 2009, Ponzi scheme allegations comprised 3.5% of all federal filings, up from 0.2% during the previous two years.  With billions of investors' dollars having evaporated overnight, aggrieved investors are aggressively pursuing recovery efforts against solvent companies that played even remote roles in these Ponzi schemes.   Recently, these targets have included financial service companies such as banks.

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