     Case: 17-11073   Document: 00515043127     Page: 1   Date Filed: 07/22/2019




        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                               United States Court of Appeals
                                                                        Fifth Circuit

                                 No. 17-11073                         FILED
                                                                  July 22, 2019
                                                                 Lyle W. Cayce
ANTONIO JUBIS ZACARIAS; ROBERTO BARBAR                                Clerk

Plaintiffs - Appellants

v.

STANFORD INTERNATIONAL BANK, LIMITED

Defendant

BARRY L. RUPERT; CAROL RUPERT; MICHAEL RISHMAGUE; LIONEL
ALESSIO; DAN AULI PANOS, et al

Movants - Appellants

v.

OFFICIAL STANFORD INVESTORS’ COMMITTEE; MANUEL CANABAL;
WILLIS, LIMITED; WILLIS OF COLORADO, INCORPORATED,

Interested Parties - Appellees

WILLIS GROUP HOLDINGS LIMITED; WILLIS NORTH AMERICA,
INCORPORATED; AMY S. BARANOUCKY; BOWEN MICLETTE; BRITT,
INCORPORATED; RALPH S. JANVEY; SAMUEL TROICE,

Appellees

v.

EDNA ABLE,

 Interested Party - Appellant
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                                 No. 17-11073
             c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129


CONSOLIDATED WITH 17-11114

THE OFFICIAL STANFORD INVESTORS’ COMMITTEE; SAMUEL
TROICE, on their own behalf and on behalf of a class of all others similarly
situated; MANUEL CANABAL, on their own behalf and on behalf of a class
of all others similarly situated,

Plaintiffs - Appellees

v.

CARLOS TISMINESKY; ROBERTO BARBAR; ANA LORENA NUILA DE
GADALA-MARIA,

Plaintiffs - Appellants

v.

WILLIS OF COLORADO, INCORPORATED; WILLIS LIMITED; WILLIS
GROUP HOLDINGS LIMITED; WILLIS NORTH AMERICA,
INCORPORATED; AMY S. BARANOUCKY; BOWEN, MICLETTE; BRITT,
INCORPORATED,

Defendants - Appellees

v.

BARRY L. RUPERT; CAROL RUPERT; MICHAEL RISHMAGUE; LIONEL
ALESSIO; DAN AULI PANOS, EDNA ABLE; et al,

Appellants

v.

RALPH S. JANVEY, in his Capacity as Court-Appointed Receiver for
Stanford Receivership Estate,

Appellee


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                                No. 17-11073
            c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
-----------------------
CONSOLIDATED WITH 17-11122

EDNA ABLE; ROBERT C. AHDERS; RODRIGO RIVERA ALCAYAGA;
DAVID ARNTSEN; CARLIE ARNTSEN; ET AL,

Plaintiffs - Appellants

v.

WILLIS OF COLORADO, INCORPORATED; WGH HOLDINGS, LTD.;
WILLIS LTD.,

Defendants - Appellees

------------------------
CONSOLIDATED WITH 17-11127

ANTONIO JUBIS ZACARIAS, Individual; ANA VIRGINIA GONZALEZ DE
JUBIS, Individual; GLADIS JUBIS DE ACUNA, Individual; ERIC ACUNA
JUBIS, Individual; TULIO CAPRILES, Individual; JORGE CASAUS
HERRERO, Individual; MARTHA BLANCHET, Individual; LUIS ZABALA,
Individual; EMMA LOPEZ, Individual; ELBA DE LA TORRE, Individual,

Plaintiffs - Appellants

v.

WILLIS LIMITED; WILLIS OF COLORADO, INCORPORATED,

Defendants - Appellees

-----------------------
CONSOLIDATED WITH 17-11128

ANA LORENA NUILA DE GADALA-MARIA, Individual; JOSE NUILA,
Individual; JOSE NUILA FUENTES, Individual; GLADYS BONILLA DE
NUILA, Individual; GLADYS ELENA NUILA DE PONCE, Individual, et al

Plaintiffs - Appellants

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                                No. 17-11073
            c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129


v.

WILLIS LIMITED, a United Kingdom Company; WILLIS OF COLORADO,
INCORPORATED, a Colorado Corporation

Defendants - Appellees

-----------------------
CONSOLIDATED WITH 17-11129

CARLOS TISMINESKY, Individual; RACHEL TISMINESKY, Individual;
FELIPE BRONSTEIN, Individual; ETHEL TISMINESKY DE BRONSTEIN,
Individual; GUY GERBY, Individual; VICENTE JUARISTI SUAREZ,
Individual; AMPARO MATEO LONGARELA, Individual; SALVADOR
GAVILAN, Individual; LARRY FRANK, Individual; MERCEDES BITTAN,
Individual; OMAIRA BERMUDEZ, Individual,

Plaintiffs - Appellants

v.

WILLIS LIMITED; WILLIS OF COLORADO, INCORPORATED,

Defendants - Appellees




                Appeals from the United States District Court
                     for the Northern District of Texas


Before HIGGINBOTHAM, GRAVES, and WILLETT, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
      The Securities and Exchange Commission filed a complaint in the
Northern District of Texas against Robert Allen Stanford, the Stanford
International Bank, and other Stanford entities, alleging “a massive, ongoing

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                                No. 17-11073
            c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
fraud.” Invoking the court’s long-held statutory authority, the Commission
requested that the district court take custody of the troubled Stanford entities
and delegate control to an appointed officer of the court. The court did so,
appointing Ralph Janvey as receiver to “collect” and “marshal” assets owed to
the Stanford entities, and to distribute these funds to their defrauded investors
to honor commitments to the extent the receiver’s efforts recouped monies from
the Ponzi-scheme players.
      The receiver has pursued persons and entities allegedly complicit in
Stanford’s Ponzi scheme. Through settlements with these third parties, the
receiver retrieved investment losses, which it then distributed pro rata to
investors through a court-supervised claims process. Four years into this
ongoing process, the receiver sued two of Stanford’s insurance brokers as
participants in the fraudulent scheme. As with the receiver’s other suits,
monies it recovered from this suit would be distributed by the receiver pro rata
to investor claimants. After years of litigation, the insurance brokers,
negotiating for complete peace, agreed to settle conditioned on bar orders
enjoining related Ponzi-scheme suits filed against the brokers. The district
court entered the bar orders and approved the settlements. Certain objectors
bring this appeal challenging the district court’s jurisdiction and discretion to
enter the bar orders. We affirm.
                                       I.
                                       A.
      The story is well known. Under the operation of Robert Allen Stanford,
the Antigua-based Stanford International Bank issued certificates of deposit,
(SIB CDs) and marketed them throughout the United States and Latin




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                                   No. 17-11073
               c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
America.1 Stanford’s financial advisors promoted SIB CDs by blurring the line
between the Antiguan bank and Stanford’s United States-based financial
advisors, creating the impression that SIB CDs were better protected than
similar investments backed by the Federal Deposit Insurance Corporation.
Stanford trained its brokers to assure potential investors that the Bank’s
investments were highly liquid and achieved consistent double-digit annual
returns, all under the protection of extensive insurance coverage.
      Here, the receiver alleges that, to support their marketing activities, the
Stanford entities purchased insurance policies through their insurance
brokers, Bowen, Miclette & Britt, Inc. (BMB) from the 1990s and Willis from
2004. As the receiver describes their role, the Stanford entities then touted
insurance policies covering the Bank in its marketing materials. Promotional
materials presented the Bank’s unique insurance coverage, describing a
gauntlet of audits and risk analyses the Bank passed to satisfy its insurers,
perpetuating the impression that Bank deposits were fully insured. They were
distributed widely and were routinely distributed to Stanford’s client base.
BMB and later Willis also provided letters of coverage to Stanford financial
advisors, often originally drafted by Stanford personnel. These letters
described the Stanford International Bank’s management as “first class
business people,” and described how the brokers “placed” Lloyd’s of London
insurance policies for the Bank. Letters and promotional materials did not
disclose the policies’ true coverage.
      Stanford’s marketing efforts succeeded. Insurance played a central role
in the Bank’s overall attractiveness to investors. Not only prospective investors
who directly viewed the brokers’ letters, but also the Bank’s client base more



      1   United States v. Stanford, 805 F.3d 557, 563–65 (5th Cir. 2015).
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                                   No. 17-11073
               c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
generally, were drawn to the combination of relatively high rates of return and
purportedly comprehensive insurance coverage. Over two decades, the Bank
issued more than $7 billion in SIB CDs to investors.
      Maturing CDs were redeemed with new investors’ principal payments.2
Deposits were meanwhile commingled and allocated to illiquid investments,
primarily in Antiguan real estate—a portfolio monitored not by a team of
professional analysts, but by only two individuals, Robert Allen Stanford and
James Davis, the Bank’s chief financial officer. BMB and Willis performed
insurance assessments on all aspects of Stanford’s businesses, such that they
enjoyed full understanding of operations. In the process, the brokers learned
that SIB CDs financed an illiquid real-estate fund, and that the quality and
risk of the underlying investments had not been disclosed to investors.
Moreover, the brokers procured policies that provided no meaningful coverage
of deposits in the Bank. When the Ponzi scheme collapsed, $7 billion in deposits
were protected by $50 million in insurance coverage. Presenting as a legitimate
enterprise, it was nothing but a single, massive fraudulent scheme.
                                       B.
      The Stanford Ponzi scheme collapsed in the wake of the 2008 financial
crisis, when the stream of new depositors ran dry.3 Among the defrauded
investors, 18,000 SIB CD holders lost around $5 billion. On February 17, 2009,
the SEC filed its complaint against Robert Allen Stanford, the Bank, and other
Stanford entities, alleging, inter alia, violations of the Securities Act of 1933,
the Securities Exchange Act of 1934 and Rule 10b-5, and the Investment
Company Act of 1940. The SEC sought an injunction against continued
violations of the securities laws, disgorgement of illegal proceeds of the


      2   Id. at 564.
      3   Id.
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                                No. 17-11073
            c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
fraudulent scheme, a freeze of the Stanford assets, and a federal court order
placing the Stanford entities into a receivership.
      The district court appointed Ralph Janvey as receiver, with authority to
take immediate, complete, and exclusive control of the Stanford entities, and
to recover assets “in furtherance of maximum and timely disbursement . . . to
claimants.”4 The district court’s Receivership Order enjoined all persons from
“[t]he commencement or continuation . . . of any judicial, administrative, or
other proceeding against the Receiver, any of the defendants [in the SEC
action, such as Robert Allen Stanford and the Bank], the Receivership Estate,
or any agent, officer, or employee related to the Receivership Estate, arising
from the subject matter of this civil action,” as well as from “[a]ny act to collect,
assess, or recover a claim against the Receiver or that would attach to or
encumber the Receivership Estate.” The district court appointed an examiner
to investigate and “convey to the Court such information as . . . would be helpful
to the Court in considering the interests of the investors in any financial
products, accounts, vehicles or ventures sponsored, promoted or sold by” the
Stanford entities, and to serve as chair of the Official Stanford Investors’
Committee (the “Investors’ Committee”) to represent investors in the Stanford
International Bank and to prosecute claims against third parties as assigned
by the receiver.
      The district court approved a process by which Stanford investors,
including investors in SIB CDs, could file claims against the Stanford entities
with the receiver, and, if approved, participate in distributions of the
receivership’s assets. The order set a deadline of 120 days for claimants to
submit proofs of claim against the receivership entities. The receiver would


      4  The 2009 Receivership Order was subsequently amended in 2010 and remained
identical in all relevant parts.
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                                 No. 17-11073
             c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
evaluate the claims, subject to an appeal process and judicial review in the
district court. Would-be claimants who failed to submit claims by the deadline
were enjoined from later asserting claims against the receivership and its
property. The court ordered the receiver to provide notice of the deadline to all
“Stanford International Bank, Ltd. certificate of deposit account holders who
had open accounts as of February 16, 2009 and for whom the Receiver has
physical addresses from the books and records of Stanford International Bank,
Ltd.” The court also ordered the receiver to publish notice on its website and
in the New York Times, Wall Street Journal, Financial Times, Houston
Chronicle, and newspapers in the British Virgin Islands, Antigua, and Aruba.
      Of the Plaintiffs-Objectors, 477 of 509—approximately 94 percent—have
and will continue to recover as claimants in the receivership’s distribution
process.5 While the record does not reflect why the remaining 32 Plaintiffs-
Objectors did not timely submit claims, they constitute less than two-tenths of
one percent of the total 18,000 defrauded SIB CD investors. And many of these
32 could not be confirmed as SIB CD investors by the receiver.
                                            C.
      The receiver identified and pursued persons and entities as participants
in the Ponzi scheme to recover funds for distribution to investor-claimants.
Armed with a receiver’s authority to provide total peace, it sued, among others,
an accounting firm, BDO USA LLC, ultimately settling the suit for $40 million,
the Adam & Reese law firm and other individuals and settling for around $4
million, and consultant Kroll LLC and its affiliate, settling for $24 million. In
each of these suits, the district court entered a bar order requested by the
parties, enjoining related claims against the defendants arising out of the


      5 Of the 509 Plaintiffs-Objectors, 455 are confirmed claimants; 22 are claimants with
the Antiguan liquidators and by agreement are treated as claimants by the receiver.
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                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
Stanford Ponzi scheme. Receivership claimants including Plaintiffs-Objectors
with approved claims recovered pro rata from the funds gathered in these
receivership actions without challenge to the bar orders.
       Five months after the appointment of the receiver, individual investor
Samuel Troice and other investors filed a putative class action in the district
court on behalf of a class of SIB CD investors against BMB and Willis of
Colorado and related entities (“the Original Troice Action”).6 The action sought
recovery of their losses from the Ponzi scheme under the Texas Securities Act,
theories of negligence and fraud. In 2011, the district court dismissed the case,
holding that the claims were precluded by the Securities Litigation Uniform
Standards Act (SLUSA). This court reversed in a consolidated appeal,7 and the
Supreme Court affirmed in Chadbourne & Parke LLP v. Troice.8 The Court
held that SLUSA’s prohibition on state-law class actions alleging fraud in “the
purchase or sale of a covered security” did not preclude the claims regarding
the purchase or sale of SIB CDs, which were not publicly traded and thus not
“covered” for SLUSA purposes.9 The case was remanded to district court for
further proceedings.10


       6  In December 2009, the Troice Plaintiffs’ case was consolidated with a similar action
filed by SIB CD investor Manuel Canabal.
        7 Roland v. Green, 675 F.3d 503, 524 (5th Cir. 2012).
        8 571 U.S. 377, 395–97 (2014).
        9 Id.
        10 In November 2012, Troice and two other individual investors joined the receiver

and Investors’ Committee in an action bringing investor class claims and receivership estate
claims against Stanford’s lawyers at the Greenberg Traurig firm. Complaint, Janvey v.
Greenberg Traurig, LLP, No. 3:12-cv-04641-N-BQ (N.D. Tex. Nov. 15, 2012) Dkt. 1. On the
defendants’ motion for judgment on the pleadings, the district court held that under Texas’s
attorney-immunity doctrine it lacked jurisdiction over the investor-plaintiffs’ class claims,
since these plaintiffs were non-clients and the conduct at issue occurred within the scope of
the attorney’s representation of a client. Official Stanford Investors Comm. v. Greenberg
Traurig, LLP, 2017 WL 6761765, at *3 (N.D. Tex. Dec. 5, 2017). The district court dismissed
Troice’s and the other investor plaintiffs’ claims against Greenberg Traurig, allowing the

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                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
       In October 2013, Troice and another individual investor, Manuel
Canabal, joined the receiver’s prosecution of a case against the same insurance
brokers. Together with these two individuals and the Investors’ Committee,
the receiver filed a complaint against Willis of Colorado and its affiliates
(collectively “the Willis Defendants”),11 and a month later amended the
complaint to add claims against BMB.12 In this suit (“the Receivership Action”),
Troice and Canabal asserted claims individually and on behalf of a putative
class of SIB CD investors. The receiver and the Investors’ Committee sought
to recover Ponzi-scheme losses on behalf of the estate under six theories:13
     (1) that Willis and BMB knowingly or recklessly aided, abetted, or
       participated in the Stanford directors’ and officers’ breaches of fiduciary
       duties towards the receivership entities, resulting in exponentially
       increased liabilities and the misappropriation of billions of dollars;
     (2) that Willis and BMB violated their duty of care towards the
       receivership entities by enabling and participating in the Stanford
       directors’ and officers’ Ponzi scheme, resulting in exponentially
       increased liabilities and the misappropriation of billions of dollars;




receiver and Investors Committee to proceed on the estate claims. Id. Troice and the investors
plaintiffs appealed, and this court affirmed. Troice v. Greenberg Traurig, LLP, 2019 WL
1648932, at *1 (5th Cir. Apr. 17, 2019). The receiver and Investors Committee did not
participate in the appeal.
        11 The plaintiffs also brought claims against Amy Baranoucky, the Stanford entities’

Client Advocate within Willis.
        12 The plaintiffs also brought claims against Robert Winter, the BMB insurance

specialist who served on the board of the Stanford International Bank.
        13 The Troice Plaintiffs attacked the Ponzi scheme with claims for violations of the

Texas Securities Act (“TSA”); aiding and abetting violations of the TSA; participation in a
fraudulent scheme; civil conspiracy; violations of the Texas Insurance Code (“Insurance
Code”); common law fraud; negligent misrepresentation; negligence/gross negligence; and
negligent retention/negligent supervision.

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                                   No. 17-11073
               c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
    (3) that Willis and BMB were unjustly enriched by proceeds of the Ponzi
      scheme, paid out to the defendants by Stanford’s directors and officers,
      transfers made with the intent to hinder, delay or defraud the
      receivership entities; 14
    (4) that Willis and BMB knowingly or recklessly aided, abetted, or
      participated in the Stanford directors’ and officers’ fraudulent transfers
      of receivership entities’ assets to third parties, including Stanford’s
      insurers, the recipients of Stanford’s investments in ventures and real
      estate, and Allen Stanford himself, with the intent to hinder, delay, or
      defraud the receivership entities;
    (5) that Willis and BMB breached their duties of care to the receivership
      entities in their hiring, supervision, and retention of employees who
      issued comfort letters in furtherance of the Stanford Ponzi scheme,
      causing exponentially increased liabilities and the misappropriation of
      billions of dollars;
    (6) that Willis and BMB conspired with Stanford directors and officers to
      use insurance as a marketing tool to sell SIB CDs in furtherance of the
      Ponzi scheme, harming the receivership entities. The district court
      dismissed this civil conspiracy claim, however, holding that the receiver
      and the Investors’ Committee failed to allege the requisite state of mind
      to sustain the claim.
In March 2014, the district court consolidated the Receivership Action and the
Original Troice Action for purposes of discovery, keeping the cases on separate
dockets.




      14   This claim is asserted by the Investors’ Committee.
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                                 No. 17-11073
             c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
                                            D.
       On February 14, 2013, five groups of individual investors (collectively
“the Florida Plaintiffs-Objectors”) filed lawsuits against Willis entities in
Florida state court, seeking compensation for the plaintiffs’ alleged Ponzi-
scheme losses, in excess of $130 million, under common law theories of
negligence and fraud. Willis removed these cases to federal court, where they
were transferred to Judge Godbey in the Northern District of Texas. The
district court remanded one of the cases to Florida state court for lack of
diversity, subject to a stay, and kept the remaining cases.
       In 2009 and 2011, two groups of individual investors (“the Texas
Plaintiffs-Objectors” collectively) filed lawsuits against Willis entities and
BMB in Texas state court,15 seeking recovery of their alleged Ponzi-scheme
losses, in excess of $88 million under the Securities Act of 1933, the Texas
Insurance Code, the Texas Securities Act, the Colorado Consumer Protection
Act, and common law theories of negligence and fraud. Willis and BMB
removed these cases to federal court, where they were transferred to Judge
Godbey. In both cases, the district court granted plaintiffs’ motions for remand
based on procedural defects in removal,16 but also held that the plaintiffs had
violated the Receivership Order’s injunction against suits encumbering
receivership assets.17 It held that the cases would remain stayed on remand
under the terms of the Receivership Order because, “to the extent Defendants
are ever held liable, any proceeds of the claim are potential receivership assets



       15 Rupert v. Winter, 2012 WL 13102348, at *1 (N.D. Tex. Jan. 24, 2012); Rishmague v.
Winter, 2014 WL 11633690, at *1 (N.D. Tex. Sept. 9, 2014), aff’d, 616 F. App’x 138 (5th Cir.
2015).
       16 Rupert, 2012 WL 13102348 at *3–4; Rishmague, 2014 WL 11633690 at *2.
       17 Rupert, 2012 WL 13102348 at *7; Rishmague, 2014 WL 11633690 at *3.



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                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
. . . . The Court will not condone or allow Stanford investors to race for
Receivership assets as the Plaintiffs attempt to do here.”18 In the second of
these cases, the plaintiffs appealed the district court’s refusal to lift the
litigation stay, and this court affirmed, recognizing “[‘]the importance of
preserving a receivership court’s ability to issue orders preventing interference
with its administration of the receivership property.’”19
       In 2016, a group of Stanford investors (“the Able Plaintiffs-Objectors”)
filed a suit against Willis in the district court for the Northern District of Texas
under common law and statutory theories, seeking recovery of their alleged
Ponzi-scheme losses in excess of $135 million.20
                                             E.
       Meanwhile,       the    receiver    and     Investors’      Committee      continued
prosecuting their claims against the Willis Defendants and BMB. After years
of litigation, thousands of hours of investigating the claims, and two
mediations, the parties to the Receivership Action agreed to terms of
settlement—a release of claims against BMB for $12.85 million, to be paid into
the receivership and distributed to receivership claimants who held SIB CDs
as of February 2009, and a release of claims against the Willis Defendants in
exchange for $120 million, also to be paid into the receivership and distributed
to claimants holding SIB CDs as of February 2009. Both BMB and the Willis
Defendants conditioned their agreement on global resolution of claims arising
out of the Stanford Ponzi scheme. Specifically, they conditioned agreement on



       18 Rupert, 2012 WL 13102348 at *9; Rishmague, 2014 WL 11633690 at *4.
       19 Rishmague v. Winter, 616 F. App’x 138, 139 (5th Cir. 2015) (unpublished) (quoting
Schauss v. Metals Depository Corp., 757 F.2d 649, 654 (5th Cir.1985)).
       20 The Able Plaintiffs-Objectors also include five individual investors, who would have

destroyed diversity in the litigation in the Northern District of Texas, and therefore joined
an existing suit by Stanford investors against Willis in Harris County, Texas.
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                                 No. 17-11073
             c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
the district court entering bar orders enjoining Stanford-Ponzi-scheme-related
claims against them. Troice and Canabal do not challenge the settlement, and
release any claims except their right to participate in the distribution of the
receivership.
       In November 2016, the district court gave notice of the settlement to
interested parties. In August 2017, the district court approved the settlements
and entered the bar orders over the objections of the Florida, Texas, and Able
Plaintiffs-Objectors. The Plaintiffs-Objectors appealed.
                                            II.
                                            A.
       The Plaintiffs-Objectors argue that the district court lacked subject
matter jurisdiction to bar claims not before the court. Alternatively, they argue
the bar orders were an improper exercise of the district court’s power over the
receivership. We review the district court’s subject matter jurisdiction de
novo,21 and review the settlement for abuse of discretion.22
                                            1.
       In the aftermath of the 1929 financial crash, Congress passed a number
of statutes to promote competition and free exchange in our country’s securities
exchanges and the market for unlisted securities.23 The “basic purpose” of
these laws was “to insure honest securities markets and thereby promote
investor confidence.”24 These laws established the SEC, an agency armed “with
an arsenal of flexible enforcement powers” to uphold the integrity of securities



       21 See Crane v. Johnson, 783 F.3d 244, 250 (5th Cir. 2015).
       22 SEC v. Safety Fin. Serv., Inc., 674 F.2d 368, 373 (5th Cir. 1982).
       23 Ernst & Ernst v. Hochfelder, 425 U.S. 185, 195 (1976).
       24 Chadbourne & Parke LLP v. Troice, 571 U.S. 377, 390 (2014) (quoting United States

v. O’Hagan, 521 U.S. 642, 658 (1997)).

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                                   No. 17-11073
               c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
markets.25 These same statutes also authorize federal courts’ jurisdiction over
actions protecting the markets. Specifically, Section 22 of the 1933 Act and
Section 27 of the 1934 Act confer jurisdiction on the district courts over
enforcement actions, including “suits in equity.”26 The acts grant the SEC
access to the courts’ full powers, including use of the traditional equity
receivership, to coordinate the interests in a troubled entity and ensure that
its assets are fairly distributed to investor creditors.27 These implicit
authorizations of receiverships are consistent with the more general express
authorization Congress provided in 28 U.S.C. § 3103. Otherwise stated,
“[f]ederal equity receiverships, despite the name, have a federal statutory
framework.”28




       25  Ernst & Ernst, 425 U.S. at 195.
       26  15 U.S.C. § 77v(a) (“The district courts of the United States . . . shall have
jurisdiction of offenses and violations under this subchapter and under the rules and
regulations promulgated by the Commission in respect thereto . . . . of all suits in equity and
actions at law brought to enforce any liability or duty created by this subchapter.”); 15 U.S.C.
§ 78aa(a) (“The district courts of the United States . . . shall have exclusive jurisdiction of
violations of this chapter or the rules and regulations thereunder, and of all suits in equity
and actions at law brought to enforce any liability or duty created by this chapter or the rules
and regulations thereunder.”); see also James R. Farrand, Ancillary Remedies in SEC Civil
Enforcement Suits, 89 HARV. L. REV. 1779, 1782 (1976) (“[T]he 1933 and 1934 Securities
Acts[] have specifically conferred equity jurisdiction on the courts”).
        27 SEC v. Wencke, 783 F.2d 829, 837 n.9 (9th Cir. 1986) (“Our court, like many others,

has recognized that as part of courts’ equitable powers under the Securities Acts of 1933 and
1934, it may impose receiverships in securities fraud actions to prevent further dissipation
of defrauded investors’ assets.”); cf. SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082, 1103
(2d Cir. 1972) (“It is now well established that Section 22(a) of the 1933 Act, 15 U.S.C. §
77v(a) (1970), and Section 27 of the 1934 Act, 15 U.S.C. § 78aa (1970), confer general equity
powers upon the district courts.”); Janvey v. Alguire, 2014 WL 12654910, at *16 (N.D. Tex.
July 30, 2014) (collecting cases); id. at *17 (“The purpose of federal equity receiverships is . . .
to marshal assets, preserve value, equitably distribute to creditors, and, either reorganize, if
possible, or orderly liquidate.”); see also Farrand, Ancillary Remedies, supra at 1788
(observing that the equity receivership has been recognized “as one means to effectuate the
purposes of a statutory scheme of regulation.”).
        28 Alguire, 2014 WL 12654910 at *14.



                                                16
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                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
       Exercising their jurisdiction under the securities laws, federal district
courts can utilize the receivership mechanism where a troubled entity will not
be able to satisfy all of its liabilities to similarly situated creditors.29 Where the
troubled entity is unable to meet its obligations, creditor-investors encounter
a collective-action problem: each has the incentive to bring its own claims
against the entity, hoping for full recovery; but if all creditor-investors take
this course of action, latecomers will be left empty-handed. A disorderly race
to the courthouse ensues, resulting in inefficiency as assets are dissipated in
piecemeal and duplicative litigation. The results are also potentially
iniquitous, with vastly divergent results for similarly situated creditors. So it
is that at the behest of the SEC the district court may take possession of the
entity and its assets, and vest control in its officer, the receiver.30 The court
empowers the receiver to “stand[] in the shoes” of the troubled entity,31
allowing him to override holdout creditors and reach decisions for the
aggregate benefit of creditors under the court’s supervision. If so directed by
the court, the receiver will systematically use ancillary litigation against third-
party defendants to gather the entity’s assets. Once gathered, these assets are
used to satisfy liabilities to the entity’s creditors, not in a disorderly creditor


       29    Liberte Capital Grp., LLC v. Capwill, 462 F.3d 543, 552–53 (6th Cir. 2006) (“The
inability of a receivership estate to meet all of its obligations is typically the sine qua non of
the receivership.”).
          30 Atl. Tr. Co. v. Chapman, 208 U.S. 360, 370–71 (1908); Crites, Inc. v. Prudential Ins.

Co. of Am., 322 U.S. 408, 414 (1944) (holding that a receiver is “an officer or arm of the court
. . . . appointed to assist the court in protecting and preserving, for the benefit of all parties
concerned, the properties in the court’s custody pending the foreclosure proceedings”);
Certain Underwriters at Lloyds London v. Perraud, 623 F. App’x 628, 637 (5th Cir. 2015)
(unpublished) (“[A] receiver is ‘not an agent of the parties,’ and is instead ‘considered to be
an officer of the court’” (quoting 12 CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL
PRACTICE AND PROCEDURE § 2981 (2d ed. 2015)).
          31 Matter of Still, 963 F.2d 75, 77 (5th Cir. 1992) (describing that a “receiver, stands

in the shoes of the failed bank, marshals the assets, and administers a fund”).

                                               17
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                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
feeding frenzy, but through a court-supervised administrative distribution
process.32 Receivership is thus a substitution of orderly, equitable creditor
recovery for the chaos and inefficiency of individualized creditor litigation with
its irrational allocation of recoveries—one born of necessity.
       For this exercise, the federal district courts draw upon “the power . . .
[to] impose a receivership free of interference in other court proceedings.”33 The
receivership’s role is undermined if creditor-claimants jump the queue,
circumventing the receivership in an attempt to recover beyond their pro rata
share. Under the securities laws, the district court’s power to determine
appropriate relief for a receivership is broad.34 The court’s powers include
“orders preventing interference with its administration of the receivership
property.”35 As we have stated:
              Courts of Appeals have upheld orders enjoining broad
              classes of individuals from taking any action regarding
              receivership property. Such orders can serve as an
              important tool permitting a district court to prevent
              dissipation of property or assets subject to multiple
              claims in various locales, as well as preventing




       32  Liberte Capital Grp., 462 F.3d at 551 (“The receiver’s role, and the district court’s
purpose in the appointment, is to safeguard the disputed assets, administer the property as
suitable, and to assist the district court in achieving a final, equitable distribution of the
assets if necessary.”).
        33 SEC v. Wencke, 622 F.2d 1363, 1372 (9th Cir. 1980).
        34 SEC v. Capital Consultants, LLC, 397 F.3d 733, 738 (9th Cir. 2005) (“A district

court’s power to supervise an equity receivership and to determine the appropriate action to
be taken in the administration of the receivership is extremely broad.” (quoting SEC v.
Hardy, 803 F.2d 1034, 1037 (9th Cir. 1986))).
        35 Schauss v. Metals Depository Corp., 757 F.2d 649, 654 (5th Cir. 1985); SEC v.

Stanford Int’l Bank, Ltd., 424 F. App’x 338, 340 (5th Cir. 2011) (unpublished) (“It is axiomatic
that a district court has broad authority to issue blanket stays of litigation to preserve the
property placed in receivership pursuant to SEC action.”).

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                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
              piecemeal resolution of issues that call for a uniform
              result.36
These can include stays of claims in other courts against the receivership,37
and bar orders foreclosing suit against third-party defendants with whom the
receiver is also engaged in litigation.38 Accordingly, at an earlier stage in the
litigation we affirmed the district court’s order enjoining the Texas Plaintiffs-
Objectors’ from prosecuting claims against Willis during the pendency of the
receiver’s action.39 While that stay was temporary and the bar orders at issue
here are permanent, it is of no moment here in the calculus of the court’s
powers. Indeed, in both cases the district court, through its control of the
receivership, enjoins non-party claims in another court—without exercising
jurisdiction over them—to protect the receivership.40
       SEC v. Kaleta illustrates this central role of the federal district court.41
In Kaleta, the SEC initiated an enforcement action against Kaleta Capital
Management and related entities, alleging a fraudulent scheme.42 As here, the
district court appointed a receiver to take custody of and represent the troubled
Kaleta entities.43 Pursuant to its appointment order, the Kaleta receiver sued
the third-party Wallace Bajjali Entities to recoup proceeds of Kaleta’s alleged
violation of the federal securities laws. After months of investigation and



       36 Schauss, 757 F.2d at 654 (internal quotation mark and citation omitted); see also
SEC v. Byers, 609 F.3d 87, 92 (2d Cir. 2010) (“An anti-litigation injunction is simply one of
the tools available to courts to help further the goals of the receivership.”).
       37 See Schauss, 757 F.2d at 653; Byers, 609 F.3d at 93; Liberte Capital Grp., 462 F.3d

at 551–52.
       38 SEC v. Kaleta, 530 F. App’x 360, 362 (5th Cir. 2013) (unpublished).
       39 Rishmague v. Winter, 616 F. App’x 138 (5th Cir. 2015) (unpublished).
       40 Rishmague, 2014 WL 11633690 at *3.
       41 530 F. App’x 360 (5th Cir. 2013) (unpublished).
       42 SEC v. Kaleta, 2012 WL 401069, at *1 (S.D. Tex. Feb. 7, 2012).
       43 Id.



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                                 No. 17-11073
             c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
negotiation, the parties reached a proposed settlement, under which the
defendants would exchange payment for the receiver’s release of claims,44
conditioned on a bar order enjoining all other claims against the Wallace
Bajjali Entities by Kaleta’s investor-creditors—non-parties—arising out of the
fraudulent scheme.45 A number of Kaleta investor-creditors objected to the
settlement, arguing the district court lacked authority to bar claims not before
the court.46 When the district court approved the settlement and entered the
bar order, the objectors appealed. In an opinion drawing upon principles so
commonplace that it was not published, we affirmed, holding that the district
court’s broad powers to fashion relief in the receivership context included the
power to enjoin other proceedings by non-parties.47
       The Tenth Circuit reached a similar conclusion. In SEC v. DeYoung, the
SEC sued retirement-account administrator APS, and, as here, the district
court took custody of the troubled company and appointed a receiver.48 The
receiver then pursued a third party, First Utah Bank, seeking recovery for the
Bank’s failure to protect APS account holders.49 The suit between the receiver
and First Utah Bank settled,50 conditioned on the district court’s approval of a
bar order that would enjoin suits by non-party APS account holders against
First Utah Bank.51 Individual APS account holders objected, arguing the
district court exceeded its authority because it barred claims “belong[ing]



       44 Id. at *2.
       45 Id. at *3.
       46 Id. at *7.
       47 Kaleta, 530 F. App’x at 362 (“Such ‘ancillary relief’ includes injunctions to stay

proceedings by non-parties to the receivership.”).
       48 850 F.3d 1172, 1175 (10th Cir. 2017).
       49 Id. at 1176.
       50 Id. at 1175.
       51 Id. at 1178



                                            20
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                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
exclusively to the individual Account Holders” not before the court; the
receiver, they argued, lacked standing to assert these claims.52 The Tenth
Circuit disagreed, finding that the receiver had standing to sue First Utah
Bank on behalf of the receivership entity and that the court had subject matter
jurisdiction to enter the bar order.53 The court’s equitable powers authorized it
to bar claims “substantially identical” to those brought by the receiver.54 The
account holders’ and receiver’s claims were substantially identical because
they involved “the same loss, from the same entities, related to the same
conduct, and arising out of the same transactions and occurrences by the same
actors.”55
       The district court will exercise its “broad equitable power in this area”56
in accord with the needs of receivership on the particular facts of each case.
Rishmague, Kaleta, and DeYoung clarify the breadth and reach of the district
court’s power to protect the operation of the receivership and its custody of the
receivership res. We find them persuasive.
       This litigation is one of several ancillary suits under the primary SEC
action that enforces the federal securities laws against Robert Allen Stanford
and his Ponzi-scheme co-conspirators.57 There is no dispute that the receiver
and Investors’ Committee had standing to bring their claims against the Willis



       52   Id. at 1180–81.
       53   Id. at 1181–82.
         54 Id. at 1176–83.
         55 Id. at 1176.
         56 SEC v. Posner, 16 F.3d 520, 521 (2d Cir. 1994).
         57 Janvey v. Reeves-Stanford, 2010 WL 11463486, at *3 (N.D. Tex. Nov. 18, 2010)

(“[T]he initial suit which results in the appointment of the receiver is the primary action and
. . . any suit which the receiver thereafter brings in the appointment court in order to execute
such duties is ancillary to the main suit . . .” (quoting Crawford v. Silette, 608 F.3d 275, 278
(5th Cir. 2010)).

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                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
Defendants and BMB. They bring only the claims of the Stanford entities—not
of their creditors58—alleging injuries only to the Stanford entities, including
from the increase in their unsustainable liabilities resulting from the Ponzi
scheme. The receiver and Investors’ Committee “allege that Defendants’
participation in a fraudulent marketing scheme increased the sale of
Stanford’s CDs, ultimately resulting in greater liability for the Receivership
Estate,” and that defendants’ “harmed the Stanford Entities’ ability to repay
their creditor investors.” The receiver and Investors’ Committee sought to
recover for the Stanford entities’ Ponzi-scheme harms, monies the receiver will
distribute to investor-claimants. The district court had subject matter
jurisdiction over these claims.
       The Plaintiffs-Objectors repeatedly urge that their claims are
independent and distinct from those asserted by the receiver and Investors’
Committee. The Plaintiffs-Objectors argue that the bar orders entail the
district court’s assertion of jurisdiction to settle their claims pending in other
judicial proceedings. They are mistaken. It is necessarily the case that where
a district court appoints a receiver to coordinate interests in a troubled entity,
that entity’s creditors will have hypothetical claims they could independently
bring but for the receivership: the receivership exists precisely to gather such
interests in the service of equity and aggregate recovery. While claims seeking
recovery for Ponzi-scheme harms can sound in tort, contract, or numerous
other causes of action, the harms arise from a singular scheme, not isolated


       58  Janvey v. Democratic Senatorial Campaign Comm., Inc., 712 F.3d 185, 190 (5th Cir.
2013) (“[A] federal equity receiver has standing to assert only the claims of the entities in
receivership, and not the claims of the entities’ investor-creditors”); Scholes v. Lehmann, 56
F.3d 750, 753 (7th Cir. 1995) (“[A] receiver does not have standing to sue on behalf of the
creditors of the entity in receivership. Like a trustee in bankruptcy or for that matter the
plaintiff in a derivative suit, an equity receiver may sue only to redress injuries to the entity
in receivership.”).
                                              22
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                                No. 17-11073
            c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
acts—that is, from a composite of conduct by numerous conspirators taken over
years, collectively establishing and perpetuating the fraud.
      The Stanford Ponzi scheme, and Willis and BMB’s participation in it,
increased the receivership entities’ liabilities and misappropriated its funds,
such that those liabilities could not be satisfied; SIB CD investors were saddled
with the corresponding lost investments. The Stanford International Bank,
and hence SIB CD investors—attracted by the promise of high returns plus
comprehensive insurance—were injured by these alleged Ponzi players who
created, amplified, and maintained the fraud. The Plaintiffs-Objectors seek to
recover assets directly from Willis and BMB to compensate lost investments in
the Stanford entities; the receiver and Investors’ Committee attempt to recover
from the same defendants to satisfy corresponding liabilities to investors
through the receivership’s distribution process. To the point, the claims of the
Plaintiffs-Objectors’ and those of the receiver and Investors’ Committee seek
recovery to address the same harms sustained by the same conduct in the same
Ponzi scheme.
      By entering the bar orders, the district court recognizes the reality that,
given the finite resources at issue in this litigation, Stanford’s investors must
recover Ponzi-scheme losses through the receivership distribution process. The
Willis Defendants and BMB contend that the bar orders are preconditions of
their respective settlements. The brokers’ incentives to settle are reduced—
likely eliminated—if each SIB CD investor retains an option to pursue full
recovery in individual satellite litigation. Such resolution is no resolution. And
the costs of undermining this settlement are potentially large. The
receivership—and thus qualifying investor claimants—will be deprived of $132
million in settlement proceeds. Continued prosecution of the receiver and
Investors’ Committee’s suit against Willis and BMB could result in the same if

                                       23
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                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
not greater recovery, but this is sheer speculation. Further, any potential value
of the receiver’s ultimate recovery must be reduced by the costs of prolonged
litigation over the same assets, not only in the receiver’s own action but also in
the Plaintiffs-Objectors’ myriad satellite suits, into which the receivership is
likely to be drawn. Supposing that Willis, an allegedly deep-pocketed
defendant, remains able to satisfy any judgment against it, the same cannot
be said of BMB: continued litigation would eat away at the limited funds
available under its “wasting” insurance policy.
       Our decision is consistent with this court’s decision in SEC v. Stanford
International Bank, Limited. (Lloyds) reviewing bar orders entered by the
same receivership court in connection with the Stanford receiver’s $65 million
settlement with insurance underwriters.59 The Lloyds bar orders enjoined
third-party litigation against the defendant underwriters who had settled with
the receiver.60 Our court differentiated the bar orders’ effect with respect to
two different categories of objectors.61 While it held that the bar orders
improperly enjoined co-insured Stanford officers’ non-investment-related suits
against the underwriters, the court approved the bar orders relative to
investors in Stanford securities, as here.62 Unlike the co-insured officers, the
investors were able to participate in the receivership’s distribution process—
they “were afforded a means of filing claims apart from the direct action suit,
and many . . . availed themselves of that opportunity.”63 The bar order


       59 SEC v. Stanford Int’l Bank, Ltd. (Lloyds), 2019 WL 2496901 (5th Cir. June 7, 2019).
       60 Id. at *3.
       61 The dissent fails to recognize this distinction in Lloyds, and overlooks the only

parallel with the instant case: the court’s approval of the bar orders as concerned investors
who—like the Plaintiffs-Objectors before us—had opportunity to participate in the
receivership distribution process.
       62 Lloyds, 2019 WL 2496901 at *3, *12.
       63 Id. at *12.



                                             24
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                                   No. 17-11073
               c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
functioned to channel investors’ recovery into the receivership distribution
process and “did not interfere with or improperly extinguish the [investors’]
rights.”64
      In this appeal we address only the effect of the Willis and BMB bar
orders enjoining third-party investors’ claims. The receiver initiated suit,
negotiated, and settled with the Willis Defendants and BMB while empowered
to offer global peace, that is, to deal with potential investor holdouts like the
Plaintiffs-Objectors. These holdouts have been content for the receiver to
pursue litigation for their benefit, then to participate as receivership
claimants, collecting pro rata. Now, however, they ask to jump the queue, come
what may to their fellow claimants who remain within the receivership
distribution process. At bottom, the Plaintiffs-Objectors seek special
treatment: they ask this court to recreate the collective-action problem that
Congress sought to eliminate so that they—and no one else—can recover in
full. We will not do so. The bar orders—enjoining these investors’ third-party
claims—fall well within the broad jurisdiction of the district court to protect
the receivership res. The exercise of jurisdiction over a receivership is not an
exercise of jurisdiction over other judicial proceedings. It rather permits the
barring of such proceedings where they would undermine the receivership’s
operation.
                                               2.
       “‘[T]he district court has . . . wide discretion to determine the
appropriate relief in an equity receivership.’”65 Again, the receivership solves
a collective-action problem among the Stanford entities’ defrauded creditors,
all suffering losses in the same Ponzi scheme. It maximizes assets available to


      64   Id. at *14.
      65   Kaleta, 530 F. App’x at 362 (quoting Safety Fin. Serv., Inc., 674 F.2d at 372–73).
                                               25
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                                 No. 17-11073
             c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
them and facilitates an orderly and equitable distribution of those assets.
Allowing creditors to circumvent the receivership would dissolve this orderly
process—circumvention must be foreclosed for the receivership to work. It was
no abuse of discretion for the district court to enter the bar orders to effectuate
and preserve the coordinating function of the receivership.
                                            B.
       Under the Anti-Injunction Act, “[a] court of the United States may not
grant an injunction to stay proceedings in a State court except as expressly
authorized by Act of Congress, or where necessary in aid of its jurisdiction, or
to protect or effectuate its judgments.”66 That is, “federal injunctive relief may
be necessary to prevent a state court from so interfering with a federal court’s
consideration or disposition of a case as to seriously impair the federal court’s
flexibility and authority to decide that case.”67 Guided by principles of
federalism, we “find[] a threat to the court’s jurisdiction” where “a state
proceeding threatens to dispose of property that forms the basis for federal in
rem jurisdiction.”68
       The district court exercises jurisdiction over the receivership estate. The
particular part of that res at issue here is $132 million receivable owed to the
receivership, conditioned upon the BMB and Willis bar orders. When in 2009
the district court took the receivership estate into its custody, the res “[wa]s as
much withdrawn from the judicial power of the other [courts], as if it had been
carried physically into a different territorial sovereignty.”69 The Plaintiffs-
Objectors’ suits in state court implicate that same res. The formal distinction



       66 28 U.S.C. § 2283.
       67 Atl. Coast Line R. Co. v. Bhd. of Locomotive Engineers, 398 U.S. 281, 295 (1970).
       68 Tex. v. United States, 837 F.2d 184, 186 n.4 (5th Cir. 1988); see Newby v. Enron

Corp., 302 F.3d 295, 301 (5th Cir. 2002).
       69 Covell v. Heyman, 111 U.S. 176, 182 (1884).

                                            26
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                                   No. 17-11073
               c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
between the Plaintiffs-Objectors’ and the receivers’ claims against the brokers
arises from the receivership’s mediating role, interposed by the district court
between the investor-creditors and the assets belonging to the Stanford
entities. The receiver sues the brokers on behalf of the Stanford entities so that
assets owed to creditors can be distributed to them administratively, through
the distribution process rather than through their own piecemeal satellite
litigations: “any proceeds of the [Plaintiffs-Objectors’] claim are potential
receivership assets, falling squarely within the bounds of the Receivership
Order.”70
      The bar orders here prevent Florida and Texas state-court proceedings
from interfering with the res in custody of the federal district court. The bar
orders aided the court’s jurisdiction over the receivership entities, which
remain in the custody of the court. The bar orders do not violate the Act.
                                            C.
      The Texas and Florida Plaintiffs-Objectors argue that the Willis bar
order deprived them of their property (that is, their claims) without due process
and without just compensation. This is a recasting of the jurisdictional
argument we have rejected. The district court was empowered to bar judicial
proceedings not before it to protect the receivership. In so doing, the court
afforded the Plaintiffs-Objectors all the process due, notice and opportunity to
be heard on the proposed settlement and bar orders—an opportunity they
seized. Moreover, they were not deprived of any entitlement to recovery: the
bar orders channel investors’ recovery associated with BMB and Willis through
the receivership’s distribution process. As SIB CD investors, Plaintiffs-
Objectors were provided notice of the receivership’s distribution process; they



      70   Rupert, 2012 WL 13102348 at *7; see also Rishmague, 2014 WL 11633690 at *3.
                                            27
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                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
were afforded an opportunity to submit proofs of claim, and to dispute the
receiver’s disposition of their entitlements within the receivership’s
administrative distribution process, including judicial review. As described,
almost all Plaintiffs-Objectors are participants in that process. The district
court’s decision to channel the Texas and Florida Plaintiffs-Objectors’ recovery
into that receivership process as opposed to independent litigation does not
deprive them of an entitlement to recover for Ponzi-scheme losses. All due
process has been afforded.
                                             D.
       The Plaintiffs-Objectors challenge the settlement agreements and bar
orders, inferring from the large settlement sums that these are “de facto class
settlements” entered unlawfully without certification of a settlement class.71
There is a likeness in function between the receivership and a hypothetical
certified SIB CD investor class action: both offer means to pursue litigation in
an aggregative form. In the former, the court channels recovery through its
officer, the receiver, and retains power to bar parallel proceedings that would
interfere. In the latter, creditors pursue their entitlements via class
representatives under the requirements of Rule 23. But, as Congress
authorizes, the district court appointed a receiver and did not certify an
investor class. The Willis and BMB settlements bring monies ultimately to be
distributed to all SIB CD investor-claimants through the receivership. There
was no illicit class settlement, and the bar orders do not offend Rule 23.




       71The Able Plaintiffs-Objectors also argue that in entering the Willis settlement, the
Troice Parties violated their fiduciary duties to members of the putative class of SIB CD
investors. The claim fails for the same reason as the other Rule 23 challenges.
                                             28
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                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
                                      E.
      The Texas Plaintiffs-Objectors argue that the bar orders deny their right
to a jury trial, retreading the jurisdictional argument we have addressed. Their
argument presumes the Objector-Plaintiffs were otherwise entitled to pursue
their independent action in state court unconstrained by the receivership
court’s bar order. We have explained why they have no such entitlement. The
right to a jury does not create a right to proceed outside the receivership
proceeding.
                                      F.
      The district court did not abuse its discretion in approving the BMB and
Willis settlement agreements. The Texas Plaintiffs-Objectors argue that a “far
greater recovery was possible,” that the settlement was premature, and SIB
CD investors could have recovered 100 percent of their investments. This is at
best speculative. The settlement was reached after years of investigation and
litigation. There was no certainty in the outcome of the Receivership Action.
The defendant brokers contested liability and insist they would continue to do
so if the settlements are terminated. It remained for the plaintiffs to prove
their claims at trial, including proving the brokers’ role in the Ponzi scheme.
The potential benefits of continued litigation must be discounted by the risk of
failing in that proof or in overcoming defenses, together with attendant costs,
mindful that to succeed it would not be enough to prove that the brokers “aided
and abetted.” The district court considered tradeoffs the parties faced with the
prospect of settlement and found the settlements “consistent with interests of
both the receivership and the investors.” The district court found no evidence
of fraud or collusion and did not abuse its discretion in approving the
settlements.



                                      29
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                                No. 17-11073
            c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
                                      III.
      The core difficulty with Plaintiffs-Objectors’ challenge to the bar of their
carve-out suits is that their theory would frustrate the central purposes of the
receivership and confound the SEC mission to achieve maximum recovery from
the malefactors for distribution pro rata to all investors. We AFFIRM the
district court’s approval of the BMB and Willis settlements and its entering of
the corresponding bar orders enjoining the Plaintiffs-Objectors’ third-party
investor claims.




                                       30
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                                 No. 17-11073
             c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
DON R. WILLETT, Circuit Judge, dissenting:
      I share the majority’s appreciation for this settlement’s practical value.
But in my view, the district court lacked jurisdiction to grant the bar orders.
The Receiver only had standing to assert the Stanford entities’ claims. It could
not release other parties’ claims, or have the court do so, in exchange for a
payment to the Stanford estate. For better or worse, the objecting plaintiffs’
claims were beyond the district court’s power.
                                           I
      Willis of Colorado, Inc., its affiliates, and Bowen, Miclette and Britt, Inc.
injured the Stanford entities by failing to thwart the Ponzi scheme.1 They
participated in, or turned a blind eye to, Stanford officers’ misdeeds. So the
Receiver asserted breach of fiduciary duty and negligence claims against them.
But Willis and BMB separately injured the Objectors. They sent the Objectors
letters misrepresenting Stanford’s soundness and its insurance coverage. So
the Objectors asserted fraud and negligent misrepresentation against them.
The Objectors’ injuries are separate from Stanford’s.
                                           II
      At its “irreducible constitutional minimum,” standing requires that the
plaintiff suffered an injury in fact, the injury is traceable to the defendant’s
actions, and the injury would likely be redressed by a favorable decision.2 This
adversity requirement applies whether the action is equitable or for damages.3




      1  These facts are taken from the Receiver’s and Objectors’ pleadings. See Lujan v.
Defenders of Wildlife, 504 U.S. 555, 561 (1992).
       2 Id. at 560–61.
       3 See Janvey v. Democratic Senatorial Campaign Comm., Inc. (“DSCC”), 712 F.3d 185,

190 (5th Cir. 2013) (applying standing limitation to the Receiver).

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    Case: 17-11073         Document: 00515043127           Page: 32     Date Filed: 07/22/2019



                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
       I believe the Receiver lacked standing to assert claims for the Objectors’
separate injuries.4 This standing defect is jurisdictional.5 And it extends to
relief like the bar orders. In another recent Stanford case, SEC v. Stanford
International Bank, Ltd. (“Lloyds”), the Receiver had settled claims against
Stanford’s director-and-officer insurers.6 But we vacated the associated bar
orders.7 The court recognized that “[t]he prohibition on enjoining unrelated,
third-party claims without the third parties’ consent . . . is a maxim of law not
abrogated by the district court’s equitable power to fashion ancillary relief
measures.”8 If no party before the court has standing to assert a claim, the
court generally lacks power to dispose of it.9 Here, the bar orders disposed of
the Objectors’ claims without their consent and without the procedural
protections of a class action.
       The Receiver contends that the Objectors’ claims are “factually
intertwined” with its own. But having defendants in common (Willis and BMB)
or having a common destination for the plunder (Stanford officers) does not
make claims the same.10 And the Objectors’ right to participate in the
receivership claims process does not change this. The receivership claims
process pays for Stanford’s liability out of Stanford’s assets. If third parties like




       4  Id. (“[A] federal equity receiver has standing to assert only the claims of the entities
in receivership, and not the claims of the entities’ investor-creditors . . . .”).
        5 E.g., Warth v. Seldin, 422 U.S. 490, 518 (1975) (“The rules of standing . . . are

threshold determinants of the propriety of judicial intervention.”).
        6 ___ F.3d ___, No. 17-10663, 2019 WL 2496901, at *1 (5th Cir. June 17, 2019).
        7 Id.
        8 Id. at *6.
        9 Cf. Smith v. Bayer Corp., 564 U.S. 299, 315 (2011) (holding plaintiff’s claim could not

be enjoined because he was not a party to prior action).
        10 See, e.g., N.Y. Life Ins. Co. v. Gillispie, 203 F.3d 384, 387 (5th Cir. 2000) (requiring

same “nucleus of operative fact” for claim identity).

                                               32
    Case: 17-11073        Document: 00515043127          Page: 33     Date Filed: 07/22/2019



                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
Willis and BMB injured both the Objectors and Stanford, they are liable to
each.
        This case is distinguishable from decisions that approved bar orders. In
SEC v. DeYoung, the Tenth Circuit affirmed a bar order after an investment
firm’s receiver settled with the firm’s former bank.11 Unlike this case, the
receiver had standing to settle individual victims’ claims because they were
based on the “same conduct” and the “same transactions”12—the bank’s failure
to monitor the firm’s accounts.13 The Tenth Circuit distinguished that situation
from Liberte Capital Group, LLC v. Capwill, a case where the receivership
entities lacked standing to sue a broker for its misrepresentations to
investors.14 In other words, DeYoung distinguished its holding from precisely
this situation. Our decision in SEC v. Kaleta is also distinguishable.15 It
affirmed a bar order but didn’t suggest that the settling defendants had made
any representations directly to the victims.16 The bar order was limited to
claims from one set of fraudulent notes.17 All to say, authority for the bar orders
here is thin to none.
                                              III
        Besides the lack of standing, the bar orders also do not fit within any
affirmative source of federal jurisdiction. At least some of the Objectors’ claims




        11 850 F.3d 1172 (10th Cir. 2017).
        12 Id. at 1179 (quoting district court findings).
        13 Id. at 1182.
        14 Id. at 1181 (distinguishing Liberte, 248 F. App’x 650 (6th Cir. 2007)).
        15 530 F. App’x 360 (5th Cir. 2013).
        16 See id.
        17 Id. at 363 (“[T]he investors continue to retain all other putative claims against the

Wallace Bajjali Parties that do not arise from the allegedly fraudulent notes that underlie
this action.”).

                                              33
    Case: 17-11073        Document: 00515043127           Page: 34      Date Filed: 07/22/2019



                                  No. 17-11073
              c/w 17-11114, 17-11122, 17-11127, 17-11128, 17-11129
are state-law claims that could not be removed to federal court.18 The district
court lacked in rem jurisdiction over these claims, as in rem jurisdiction
extends only to receivership property.19 And receivership property consists of
Stanford’s assets, not its victims’ claims.20
       The district court had no ancillary jurisdiction either. Ancillary
jurisdiction extends only to claims by or against the Receiver.21 So the district
court had no jurisdiction to adjudicate these claims. And in my view it had no
jurisdiction to permanently enjoin them.22
                                               IV
       Federal courts cannot decide a claim’s fate outside the “honest and actual
antagonistic assertion of rights.”23 I would vacate the bar orders.
       Respectfully, I dissent.




       18     E.g., Rishmague v. Winter, No. 3:11-CV-2024-N, 2014 WL 11633690, at *1 (N.D.
Tex. Sept. 9, 2014) (remanding some Rupert Parties’ claims to state court).
           19 Cf. Riehle v. Margolies, 279 U.S. 218, 223–24 (1929) (distinguishing distribution of

debtor’s property from determination of claims against it).
           20 See id.; Lloyds, 2019 WL 2496901, at *6 (“[T]he court may not exercise unbridled

authority over assets belonging to third parties to which the receivership estate has no
claim.”); DSCC, 712 F.3d at 190 (“[A] federal equity receiver has standing to assert only the
claims of the entities in receivership, and not the claims of the entities’ investor-creditors
. . . .”).
           21 See 12 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE &

PROCEDURE § 2985 (2d ed. 2018); see also Lloyds, 2019 WL 2496901, at *6 (stating power to
fashion ancillary relief does not affect prohibition on enjoining unrelated claims).
           22 See Lloyds, 2019 WL 2496901, at *6.
           23 United States v. Johnson, 319 U.S. 302, 305 (1943) (quoting Chi. & G.T. Ry. Co. v.

Wellman, 143 U.S. 339, 345 (1892)).
                                               34
