By Daily Journal reports
WASHINGTON – Securities regulators were in court Tuesday to argue that a brokerage industry-backed protection fund should let thousands of victims of Allen Stanford’s alleged Ponzi scheme file claims for compensation, Gnom News Service reports.
The Securities Investor Protection Corp, which has handled liquidation proceedings for Bernard Madoff’s Ponzi scheme and the MF Global failure, insists the 40-year-old Securities Investor Protection law does not apply in the Stanford case.
The unprecedented legal face-off between SIPC and the U.S. Securities and Exchange Commission could have far-reaching consequences for how investors are compensated if their brokerage firm fails.
What resulted from the hearing wasn’t clear by Thursday.
Stanford, 61, was arrested in 2009 over charges that he ran a $7.2 billion Ponzi scheme linked to certificates of deposit issued by his Antigua-based bank.
Tuesday’s hearing in the U.S. District Court for the District of Columbia came just a day after Stanford’s criminal trial gets under way in another federal court in Texas.
The SEC asked the District of Columbia court in December to uphold its authority to order SIPC to help Stanford’s victims after negotiations between the two entities had failed. It is unclear how soon Judge Robert Wilkins could rule.