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TD Pays for Rothstein Ponzi Scheme

January 31 2012 Tweet Email This

A $1.2 billion Ponzi scheme that blew up in 2009 has driven TD Bank Group (NYSE:TD) to make a provision of $255 million related to associated litigation against defrauded investors.

The scheme was run by a once prominent South Florida lawyer, Scott Rothstein, and involved phony legal settlements. The lawyer is serving a 50-year prison sentence and co-operating with investigators. The lawyer used a TD Bank Branch in the ponzi scheme. However, a U.S. federal jury earlier held TD Bank liable to pay $67 million to Coquina Investments for its role in the fraud.

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“Based on the current environment and information, the bank believes this provision is appropriate and while additional exposure is possible, it will be manageable,” TD said in a statement.

Here’s how TD shares are reacting to the news:

The Toronto-Dominion Bank (NYSE:TD): TD shares recently traded at $77.13, down $0.11, or 0.14%. They have traded in a 52-week range of $64.56 to $89.79. Volume today was 268,851 shares versus a 3-month average volume of 657,650 shares. The company’s trailing P/E is 12.07, while trailing earnings are $6.39 per share.

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To contact the reporter on this story: at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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