A federal appeals court has affirmed a ruling in favor of several insurers, including Lloyd’s of London, and an asset management company in connection with the large Ponzi scheme once run by Allen Stanford, the Texas financier now serving a 110-year prison term.

The 5th U.S. Circuit Court of Appeals in New Orleans upheld a ruling by the U.S. District Court in Baton Rouge, Louisiana, holding that neither Oaks, Pennsylvania-based SEI Investments Co. nor the insurers were liable in connection with the Ponzi scheme, according to Friday’s ruling in Robert C. Ahders v. SEI Private Trust Co., Pennsylvania Corp. et al.

Insurers named as defendants in the case were: CNA Financial Corp. unit Continental Casualty Co.; Certain Underwriters at Lloyds of London; Axa XL unit Indian Harbor Insurance Co.; Hartford Financial Services Corp. unit Nutmeg Insurance Co.; Hamilton, Bermuda-based Allied World Assurance Co.; and Arch Capital Group Ltd. unit Arch Insurance Group.

Mr. Stanford’s scheme involved selling fraudulent certificates of deposit to investors through his company, Stanford International Bank Ltd. The plaintiffs in the litigation are investors who bought SIBL certificates of deposit as part of their individual retirement accounts, the ruling said. The IRAs were held by Stanford Trust Co.

To perform its operational functions STC contracted with SEI, which under its contract was responsible for, among other functions, sending account statements to clients. The contract specified the “legal relationship” of SEI to STC was intended to be that of an independent contractor.

The investors alleged SEI is liable for STC’s violations under Louisiana securities law’s “control-person provisions.” The U.S. District Court in Baton Rouge granted both SEI and the insurers summary judgment dismissing the litigation.

The ruling was affirmed by a unanimous three-judge appeals court panel.  “The investors’ sole claim is that SEI is liable for STC’s primary violations of Louisiana Securities Law as a control person,” the ruling said. “As the district court recognized, the contract between STC and SEI is strong evidence that SEI was unable to control STC’s primary violations.”

“The investors do not refute this evidence and admit that they ‘do not contend that SEI priced the SIBL CDs.’ Nor do the investors allege that SEI was involved in selling the SIBL CIDs or in holding the SIBL CDs in IRAs.

“Instead, despite the contractual terms, the investors argue that SEI had direct or indirect control over STC’s primary violations due to various aspects of SEI’s role as a service provider for STC.”

“A reasonable jury could not conclude that SEI is liable as a control person merely because STC committed primary violations using SEI’s services,” the appeals panel said in affirming the district court’s grant of summary judgment.

Parties in the litigation did not return requests for comment.

In June 2019 a federal appeals court threw out a settlement requiring insurers to pay $65 million to a court-appointed receiver for companies once run by Mr. Stanford.