ABiz -> Acadiana Business WED, JUN 15 3:00PM by Leslie Turk

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.



Comments (12)add
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written by investor , June 15, 2011 - 08:34 pm
It has been a long awful wait. I would like to thank our Louisiana politicians on both sides of the isle that came together and supportted us, and mostly David Vitter who without his constant support today would not have happened.

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...............
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written by the original northsidian , June 15, 2011 - 11:13 pm
Finally justice for the folks who lost their money in a ponzi scheme that was gov't approved. Now when will something be done to the crooked brokers? I want a Baboon to jump out of my ass if they didn't know it was a scam!!
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written by Tex , June 15, 2011 - 11:19 pm
Here’s someone worse than Madoff. Read the information at this link and forward it to everyone you know, so they don’t get scammed: http://texsquixtarblog.blogspo...-rich.html
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written by EXISTENTIALIST HOMME , June 16, 2011 - 12:59 am
Mr. Stanford and Mr. Madoff had a green light from our government Regulatory Agencys, in scamminmg the investors. Hell, the major Guardian of these two Ponzi was the administration in Washington holding back the bloodhounds.
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written by James Melancon , June 16, 2011 - 01:33 pm
Are all losses due to frauds and natural disasters to be reimbursed by the government? It seems everyone expects the government to pay for the problems of life. This is a path to national bankruptcy.
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written by the original northsidian , June 17, 2011 - 01:31 pm
James, let's just start another war for the oil companies!! How much do you think the gov't is paying for this. And who is getting rich?? What about the LHA contracts, who is getting rich on that? These people invested with crooked brokers my boy!! That is what SIPC is about. Now I do believe the brokers should also be held accountable. But this is Merika bro, and the rich get richer and the poor go to prison!
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written by Dudley E. LaBauve, III , June 17, 2011 - 04:35 pm
If indeed, an investor's registered securities and cash in brokerage accounts, went missing from these accounts during the federal seizure of Stanford Financial Group and ensuing bankruptcy of the company, then SIPC coverage would apply up to $500,000 in cash and securities per account.
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.


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written by the original northsidian , June 17, 2011 - 10:30 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?


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written by Dudley E. LaBauve, III , June 20, 2011 - 08:18 pm
Original Northsidian. I understand the Feds are trying to claw back the commissions earned by Tiffany, Hank, and the other named brokers, but that is just a small fraction of what the clients are out. My guess is these brokers will be prosecuted, fined, and may get a little jail time. The hard part is going to be tracing where the CD money is, what it was invested in by the Bank, what the value of those investments are, what the value of Allen Stanford's assets are, and then liquidate what can be liquidated in order to try and return as much to investors as possible.
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.
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written by the original northsidian , June 20, 2011 - 11:03 pm
Dudley, I think the investors should get as much back as possible also. But, I think the brokers who broke the investors should be prosecuted,fined and get as much jail time as a brother who steals a $500.00 set of tires & rims. Do you agree with me? My question is this: Why is everyone tip-toeing around the broker issue?? Is it because of their political connections?
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written by Dudley E. LaBauve, III , June 22, 2011 - 08:30 pm
Original Northsidian. I have no idea why anyone would be tip-toeing around the broker issue. Maybe you're right, and political connections play a role. I'm not an attorney, nor am I an expert in the law relating to securities fraud, etc., but I believe the following will be considered: The brokers were pressured by Stanford to sell these CD's and were paid handsome commissions (relative to commissions paid on FDIC insured CD's). I guess the brokers will argue that Stanford assured them in some way of the relative safety of this investment. Stanford is the one who blew the money, and the brokers were the ones who collected it for him. The law may punish them by assesing their level of responsibility, and how well Stanford fooled them. I know of a broker who left Stanford Group because of the push to sell these CD's. He wasn't comfortable with what Stanford was doing, and left the firm. That is what the brokers should have done, but, what do I know?
I agree with you that punishment should not be light. A real message should be sent.
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written by NORTHSIDIAN SHOTGUN , June 23, 2011 - 03:18 am
Ignorance of the law does not excuse a criminal act... Sheet, Kaliste's favorite blurb the morn after Mardi Gras.
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