- SEC Sues SIPC, Seeks to Force Industry Insurer to Ante Up for R. Allen Stanford Customer Losses
SEC Sues SIPC, Seeks to Force Industry Insurer to Ante Up for R. Allen Stanford Customer Losses
Posted Dec 13, 2011 10:51 AM CDT
By Martha Neil
In what may be the first such case ever brought, the U.S. Securities and Exchange Commission has filed suit against a securities industry insurance fund, seeking to force it to liquidate the operation of R. Allen Stanford, reports the Houston Chronicle.
If the SEC suit against the Securities Investor Protection Corp. is successful, the SIPC would be forced, as part of the liquidation process, to determine whether those who purchased so-called certificates of deposit from an offshore bank in Antigua controlled by Stanford are entitled to reimbursement. The suit was filed in federal court in Washington, D.C.
Stanford, a onetime Texas billionaire who has been jailed since 2009, is facing criminal fraud charges concerning the alleged Ponzi scheme he operated from his bank.
The SIPC says it is not responsible for customers' losses, because Stanford did not sell them securities:
"After careful and exacting analysis, we believe the SEC's theory in this case conflicts with the Securities Investor Protection Act, the law that created SIPC and has guided it for the last 40 years," said chairman Orlan Johnson in a written statement provided to the Chronicle.