The US Supreme Court returned from its three-month break Monday to hear arguments in the Allen Stanford scam case, which could have major impact on victims' compensation.

The high court is immediately tackling one of the many financial matters on its docket this term, which lasts through early 2014.

The case concerns investors in the US states of Louisiana and Texas which claim the right to a class-action lawsuit against law firms, insurance companies and financial firms that they say enabled Stanford and his scam.

In June 2012, the Texas financier and cricket mogul was sentenced to 110 years in jail for a $7 billion Ponzi scheme, marking a stunning fall from grace for the flamboyant ex-tycoon.

The decision brought little financial relief to some 30,000 investors from more than 100 countries which were bilked by bogus investments with Stanford International Bank.

An appellate court in New Orleans, Louisiana, held that a group of local investors could bring a class-action lawsuit against third-party intermediaries on the grounds that even if the companies were not aware of exact fraud, they had ignored a number of signs in the Stanford affair.

Two insurance companies, one law firm and one financial firm, however, brought the case to the Supreme Court, under an 1998 federal law meant to prevent the proliferation of class-action lawsuits.

The case has implications far beyond the Stanford scheme, said lawyer Linda Mullenix in a document previewing the case.

"Instead these appeals implicate the very important question of the ability of plaintiffs to seek recovery in class-action litigation against third-parties whose actions arguably were peripheral to the original fraud," she said.

The court will announce a decision in early 2014.

 

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