By NEMS Daily Journal
WASHINGTON, D.C. – Securities Investor Protection Corp. said Monday it will not reimburse victims of the Stanford financial scandal.
SIPC alleges Stanford committed fraud, not theft, and therefore it has no liability for damages, officials say.
Allen Stanford, chairman of the now defunct Stanford Financial Group, based in Houston, Texas, was charged on Feb. 17, 2009, by the U.S. Securities and Exchange Commission with fraud and other violations of U.S. securities laws for an alleged $7.2 billion Pozi scheme that involved supposedly “safe” certificates of deposit.
SIPC maintains the circumstances specific to the Stanford case mean “that the law doesn’t provide for payouts to investors.”
The SEC’s staff initially agreed.
But on June 15, the SEC informed SIPC that the “Stanford matter was appropriate for a proceeding under the Securities Investor Protection Act,” or SIPA.
Bloomberg news service’s report says “the SEC told SIPC to start a process that could give as much as $500,000 to each qualified Stanford investor.
“The agency further surprised SIPC by threatening to sue if it didn’t carry out the plan.”