News Americas, WASHINGTON, D.C., Mon. July 21, 2014: The founder of the Stanford Victims Coalition, a group of thousands of investors who lost millions in the fraud perpetuated by R. Allen Stanford and the Stanford Financial Group and Stanford International Bank on Antigua, have vowed to continue to fight despite an appeal court ruling that claims they are ineligible under U.S. federal law to file claims seeking compensation for their losses.
Angela Shaw Kogutt, the founder of the Stanford Victims Coalition, insists: “We will continue to pursue all options available to the victims.” She added that her group is also weighing legal action against The Securities Investor Protection Corp. (SIPC), which insures U.S. brokerage accounts but has refused to pay Stanford victims even as qualified Bernie Madoff victims were deemed eligible for SIPC’s maximum coverage of $500,000 per account.
Kogutt also said the SVC will continue to pressure the Securities and Exchange Commission, SEC, to continue fighting. THE LAWSUIT The SEC sued the SIPC in 2012 on behalf of the Stanford investors, arguing they also were entitled to coverage, as Stanford’s U.S. brokerage was an SIPC member. But SIPC says its insurance covers only securities, and even if the Stanford CDs are considered securities, they are worthless.
JULY 18, 2014 RULING
Judge Sri Srinivasan on Friday sided with the SIPC. “In declining to grant the SEC’s requested relief, the district court expressed that it was ‘truly sympathetic to the plight’ of the victims,” Judge Srinivasan wrote in the unanimous opinion. “We fully agree. But we also agree with the district court’s conclusion….”
SEC/SPIC SEC spokesman John Nester said the agency was reviewing the decision. The SEC has 45 days to decide whether to appeal it, either by seeking a re-hearing before the appeals court or by filing a petition with the U.S. Supreme Court. The case marks the first time that the SEC, which oversees the SIPC, has filed a lawsuit against the non-profit corporation to try and force it to start a court liquidation proceeding. But the SIPC has said these investors did not qualify as “customers” under the law since the Stanford’s Texas-based brokerage Stanford Bank was an offshore bank. In a statement, SIPC President Stephen Harbeck said he appreciated “the considerable time” the court devoted to the case, and said SIPC has the “deepest sympathy” for the victims.
The SIPC, created by Congress, administers an industry-backed fund that is used to help compensate investors if their brokerage collapses.
Louisiana Republican Senator David Vitter, meanwhile, said Friday he will urge the SEC to appeal, and called again on President Barack Obama to nominate fresh faces to serve on the SIPC board. “The previous chairs of the board were only interested in protecting Wall Street,” Vitters told the Times-Picayune.
Some 28,000 investors—10 times the number of direct investors in the Madoff case—bought certificates of deposit from Stanford International Bank in Antigua, which was owned by Texas financier R. Allen Stanford. He lured investors with promises of significantly higher interest payments than provided by U.S. banks and financial companies. Several U.S. lawmakers were among those who had received donations from Stanford including Sen. John Cornyn, Texas Republican, U.S.V.I. Congressional Delegate Donna M. Christensen, Senate Minority Leader Mitch McConnell and former Rep and current Chicago mayor, Rahm Emanuel. Stanford was convicted of fraud and sentenced in June 2012 to 110 years in prison for bilking investors with fraudulent certificates of deposit issued by Stanford International Bank, his bank in Antigua. He is currently in federal prison.
