By Daily Journal reports
WASHINGTON – The Securities and Exchange Commission has decided to sue the insurance fund for U.S. brokerage accounts, after months of behind-the-scenes haggling failed to resolve a dispute involving coverage for some investors who lost money in Allen Stanford’s alleged $7.2 billion Ponzi scheme.
The lawsuit, the first ever by the SEC against Securities Investor Protection Corp., could be filed as early as today or Tuesday, the Wall Street Journal and Houston Chronicle reported.
In June, the SEC decided that, more than two years after Stanford Financial’s collapse, clients of its SIPC-insured U.S. brokerage should be covered by the fund, which is financed by the brokerage industry. SIPC, though, didn’t take up the issue until its September board meeting, and even then, it didn’t make a decision.
SIPC, meanwhile, has argued that the investments sold by Stanford don’t qualify for SIPC coverage, a position echoed by the securities industry. Attempts to reach an agreement between the SEC and SIPC, apparently broke down last week.
Lawmakers had threatened to convene congressional hearings into the dispute is a decision wasn’t made by Thursday.