SEC: Stanford victims should be compensated
The Securities and Exchange Commission Wednesday concluded that Stanford victims, like those of Bernie Madoff, should be compensated by the Securities Investor Protection Corp., which handles claims for investors if their brokerage firm fails. The long-awaited decision came after a two-year battle that started with an SIPC opinion that Stanford victims were not eligible to file claims. It also came a day afer U.S. Sen. David Vitter put a hold on two SEC member nominations.
In its decision, the SEC said people who bought so-called certificates of deposit through the Stanford Group Co., Stanford’s U.S. brokerage arm, are entitled to protection by SIPC. The SEC said it would formally ask SIPC to institute a liquidation proceeding that would allow claims to be filed.
Allen Stanford is awaiting trial on charges he defrauded $7 billion from investors, about $1 billion of which came from investors in South Louisiana (there are 1,800 Stanford victims in the state), including a significant number from the Lafayette area.
Though its Wednesday recommendation is a major victory for Stanford’s victims, the SEC’s Stanford problems are far from over, as local investors have sued the regulatory agency, alleging negligence and misconduct.
In announcing his intentions to block the SEC nominations Tuesday, Vitter said: “Unfortunately, the SEC has not yet given the Stanford victims an answer despite my repeated conversations with Chairwoman Mary Schapiro. Many of these folks in Louisiana and along the Gulf region lost their life savings, and they at least deserve a direct answer on their request for coverage. After months of delay the commission has now met a number of times to consider SIPC coverage for Stanford’s victims. It would be salt in the wound of these victims for Congress to force those discussions to start over by approving new commissioners.
“We’ve known for some time that the SEC waited far too long to take action against Allen Stanford, and now they’re dragging their feet in responding to the victims,” Vitter continued. “I will continue to hold them accountable – including holding these nominations – until these fraud victims get an up-or-down answer from the SEC on SIPC so they can move forward in the process, and if necessary, file a judicial appeal.”
SIPC said it is analyzing the SEC’s recommendation and indicated it would make a decision soon.
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Subscribe to this comment's feedwritten by the original northsidian , June 15, 2011 - 06:13 pm
written by Tex , June 15, 2011 - 06:19 pm
written by EXISTENTIALIST HOMME , June 15, 2011 - 07:59 pm
written by James Melancon , June 16, 2011 - 08:33 am
written by the original northsidian , June 17, 2011 - 08:31 am
written by Dudley E. LaBauve, III , June 17, 2011 - 11:35 am
If investors purchased non-FDIC insured Stanford International Bank CD's, then they have a much more difficult journey to getting any of their money back.
The brokers who sold these CD's to clients knew better than to sell non-FDIC insured CD's to clients, without fully disclosing the risk of doing so. The local broker, Tiffany Angelle, worked at FM Bank for several years prior, and she knew damned well about FDIC coverage.
The clients who opted not to buy the CD's and just bought registered securities (like stocks, bonds, mutual funds, etc.) in their Stanford brokerage accounts, which were actually custodied by Pershing L.L.C. (a qualified custodian and clearing company) will be covered by SIPC. Most qualified custodians, if not all, are not only SIPC members, but also carry up to $1 billion of supplemental insurance for client accounts, in the event of a broker-dealer failure.
Bernie Madoff was able to steal money, because his own private investment management firm custodied the clients' monies. Allen Stanford was able to steal, because he owned the non-US, non-FDIC member bank which had custody of those monies used to purchase CD's.
written by the original northsidian , June 17, 2011 - 05:30 pm
So Dudley what does that mean to the folks who bought CD's from a broker such as Tiffiny Angelle or Hank Mills (Sen. Fred Mills brother) who told them they were FDIC insured? And what is happening to the brokers?
written by Dudley E. LaBauve, III , June 20, 2011 - 03:18 pm
It's a truly rotten deal for those people who invested in those CD's. Oh, by the way, if the brokers actually told clients the CD's were FDIC insured, and the clients can prove it, that's another legal problem for the brokers, but, even if you can take every penny from the brokers, it will amount to an insignificant amount of money relative to the size of the scam.
I wish the investors luck in getting as much back as possible.
written by the original northsidian , June 20, 2011 - 06:03 pm
written by Dudley E. LaBauve, III , June 22, 2011 - 03:30 pm
I agree with you that punishment should not be light. A real message should be sent.
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Many readers of this article may not believe we deserve the SIPC insurance. I hope you would take the time to understand the facts of this case. There where no high interest rates promised to me or the many others i know that lost money. The money invested never went to buy CD's it just went to the brokerage firm, to Stanford and his brokers. A scam the SEC Dallas office was concerned about since 1999.
It it a good day for many in South Louisiana... everyday people mostly retired people who saved their whole lives...
It is the first good day in a long time...............