For victims of R. Allen Stanford’s alleged $7 billion Ponzi scheme, help is on the way.
The Securities and Exchange Commission declared Wednesday that Stanford investors are entitled to protection from the Securities Investor Protection Corp., which insures accounts at failed brokerages in much the way that the FDIC backstops bank accounts.
The SIPC had resisted assuming financial responsibility for the Stanford investors’ losses, saying the alleged victims lacked legal standing to recoup money from the organization.
In its announcement, the SEC threatened to go to court if necessary to compel the SIPC to intervene.
The SIPC argued that the allegedly bogus certificates of deposit that Stanford investors bought were issued by Stanford International Bank Ltd., a separate entity from the SIPC-insured brokerage firm Stanford Group Co. The SEC concluded, however, that both entities were part of the same scheme.
Stanford investors have been pleading for relief and have taken their case to members of Congress, as well as to the SEC.
The SEC’s announcement came one day after Sen. David Vitter (R-La.) said he would block two nominees for positions as SEC commissioners until the agency issued its decision in the Stanford matter.