UPDATE 2-US judge allows Stanford, others to seek defense fees

* Judge says execs entitled to defense costs

* No guarantee claims will be paid
(Adds representative for receiver declining to comment)

By Anna Driver

HOUSTON, Oct 9 (Reuters) - Financier Allen Stanford and
other executives who face charges related to an alleged $7
billion fraud may file claims for defense funds under a
directors' and officers' insurance policy, a federal judge said
on Friday.

Stanford has had his assets frozen since civil charges were
filed against him in February. He said he has no money to pay
his lawyers, and is currently represented by court-appointed
lawyers.

A number of former Stanford executives, including former
Chief Investment Officer Laura Pendergest-Holt, have filed
claims against a policy issued by Lloyd's of London [LOL.UL].

Lloyd's initially agreed to reimburse some legal expenses
for Pendergest-Holt, but Ralph Janvey, the receiver in the
case, argued proceeds are assets of the Stanford estate and
should be set aside for investors.

Janvey had threatened to hold Lloyd's in contempt of court
if they made payments to the executives, court records show.

"Today the court holds only that its prior orders do not
bar Lloyd's from disbursing policy proceeds to fund directors'
and officers' defense costs in accordance with the D&O polices'
terms and conditions," U.S. District Judge David Godbey said in
a nine-page order.

Jeffrey Tillotson, a lawyer for Pendergest-Holt, said he
was very pleased with Godbey's decision.

"Our client is entitled to a defense and now she will have
the resources to pay for one," Tillotson said, adding that his
client, who also had her assets frozen, has been living off
"kindness, friends and family."

Godbey also said he would have authorized payment of the
defense fees even if the insurance proceeds were part of the
Stanford estate.

A representative for Janvey declined to comment on the
ruling.

Still, there is no guarantee of coverage. Lloyd's said in a
September court filing that claims resulting from "money
laundering and from dishonest, fraudulent, or criminal acts"
are excluded from coverage.

Stanford and Pendergest-Holt have both pleaded not guilty
to the charges related to what prosecutors labeled a massive
Ponzi scheme tied to the firm's offshore bank in Antigua.

The case is SEC vs Stanford International Bank Ltd, U.S.
District Court for the Southern District of Texas, No.
09-00298.
(Reporting by Anna Driver, editing by Leslie Gevirtz and
Matthew Lewis)