The Securities Investor Protection Corp. has been paying victims of Bernie Madoff’s Ponzi scheme but claims it’s not responsible for any coverage of Stanford victims’ losses, Bloomberg reported today. Stanford Group Co., which sold the so-called CDs at the heart of what numerous federal officials now believe was also an $8 billion Ponzi scheme, was insured by the SIPC (the logo appeared on business cards and stationery, a source of comfort to investors).
So why pay Madoff’s victims and not R. Allen Stanford’s?
Under U.S. law, SIPC repays up to $500,000 in custodial losses to investors whose securities are missing from accounts at member firms, SIPC President Stephen Harbeck told Bloomberg. The protection doesn’t extend to investors who’ve got their certificates, even if the securities have been rendered worthless by fraudulent conduct, he said.
Say what? SIPC covers fraud, but not this kind of fraud?
Read the rest of the story here.