While Stanford’s Texas-based brokerage Stanford Group Company was a SIPC member, its offshore bank was not. And in any case, SIPC said it was not chartered by Congress to combat fraud or guarantee an investment’s value.The Wall Street Journal reported that Stephen Harbeck, the chief executive of SIPC, said his agency believes the court reached the correct decision but stressed it opposed paying Stanford victims only “reluctantly after great deliberation.”
Allen Stanford was sentenced in June to 110 years in prison for bilking investors with fraudulent certificates of deposit issued by Stanford International Bank, his bank in Antigua.
Since 2009 when Stanford was first arrested and charged, victims of the fraud have been fighting for SIPC to start a liquidation proceeding in the hope of getting back at least some of the funds they lost.
“The statute that we operate under simply doesn’t cover these victims,” he said. “It was never designed to replace value lost for fraud,” but instead to ensure custody of customer funds, he said.Read the WSJ story here.
At a congressional hearing earlier this year, Mr. Harbeck said SIPC had privately offered to commit its funds to pay Stanford victims, as part of its negotiations with the SEC. Mr. Harbeck declined to say Tuesday if that offer was still on the table.
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