MIAMI (CN) – A bank that paid $1 million to settle criminal securities fraud charges cannot dismiss a complaint filed last year by former investors, a federal judge ruled.
The Securities and Exchange Commission charged Regions Bank in September 2009 with aiding and abetting in the sale of securities by an unregistered dealer, U.S. Pension Trust Corp.
About 14,000 people in Latin America bought multiyear securities or investment plans from the trust, abbreviated in court records as USPT, and another of Regions’ partners, U.S. College Trust Corp.
By executing a trust agreement with Regions acting as their trustee, the USPT investors could invest their money in U.S. mutual funds.
Regions offered and sold the plans from 1995 to 2008. It then stopped accepting new investors but continued to get contributions from current investors until 2009.
Though Regions settled the charges against it on the same day they were filed, USPT was found guilty of unlawfully engaging in the sale of securities as an unregistered dealer.
It had to disgorge $62 million and pay $50 million in civil penalties.
Laura Yelitza Cifuentes and Merle De La Mercedes Silva Castro sued Regions in September 2011, claiming that the bank violated a Florida law that requires securities sellers to be registered with the state. They seek rescission of their USPT investment plans, along with interest and attorneys’ fees.
Cifuentes and Castro are surviving family members of one of the original class members. The court allowed the substitution because they inherited the claims under Columbia’s Intestacy Law.
U.S. District Judge Frederico Moreno refused to dismiss the case last week, rejecting claims that that the two-year statute of limitations had elapsed.
Though Regions said the clock began running when the investors bought their plans, a time frame that ended January 2008, or when Regions stopped accepting contributions from current investors, August 2009.
The second date would make the investors’ complaint too old by one month.
But Moreno concluded that the earliest date possible to start the statute of limitations was Sept. 21, 2009, the date that the SEC filed and settled its case against Regions.
Regions has until July 11 to answer the amended complaint.