It's been a long time since members of Congress have put partisan politics aside for a common cause. But it happened today when 41 U.S. senators and representatives urged the SEC to provide SIPC coverage to Stanford Group Co. victims.
It's been a long time since members of Congress have put partisan politics aside for a common cause. But it happened today. Securities and Exchange Commission Chairman Mary Shapiro is being urged by a bi-partisan group of 41 members of Congress to extend Securities Investor Protection Corp. coverage to Stanford Group Co. victims.
In a May 6 letter just obtained by The INDsider, the group urges Shapiro to immediately initiate a liquidation of Stanford Group Co. under the Securities Investor Protection Act (SIPA) and order the SIPC to pay claims to customers of SGC, which was an SEC-registered broker dealer and SIPC member. In supporting its position, the group reminds Shapiro of the recent SEC inspector general's report that uncovered the SEC's abysmal failure in stopping Stanford, despite knowing since 1997 that the company was likely running a Ponzi scheme.
Created by Congress in 1970, SIPC is funded by member brokers and dealers across the country. It offered more than $500 million in coverage to fraud victims of Bernard Madoff but has repeatedly denied coverage to Stanford victims in 46 states because most of Stanford's investors lost money earmarked for Antigua-based Stanford International Bank. In reality, however, many of the funds were never even sent to the offshore bank, but were diverted to Allen Stanford himself or back to SGC.
The group of congressmen, which includes Sens. Mary Landrieu and David Vitter, and Reps. Charlie Melancon, Bill Cassidy, Rodney Alexander and Anh "Joseph" Cao, contends that SIPC was created to protect customers whose funds are stolen by a registered broker dealer. And in the Stanford matter, they maintain, customers' funds were indeed stolen by the owner of registered broker dealer.
The Stanford Victims Coalition has been the driving force behind securing this bi-partisan push. "It has been like moving a mountain," says one local Stanford investor who asked not to be identified. "It has been done without teams of lawyers. It has been done largely by a few dedicated people who have spent every day working on this since it has happened, and I think all the victims can finally say someone is listening."
Read the letter to Shapiro here.