Judge Rules Against SEC - Stanford Case

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Thursday, 05 July 2012 02:30

By caribarena news

Antigua St. John’s - A US federal district judge rejected a request for an industry-backed fund to start a court proceeding that could lead to compensation for victims of the US $7 billion Stanford Ponzi scheme on Tuesday.

And the move has reiterated calls from local interest groups for a united approach on behalf of the victims.

The decision has been considered a blow to the victims as the Securities and Exchange Commission (SEC) had sought to force the Securities Investor Protection Corp (SPIC) to start liquidation proceedings for the victims through the court proceedings.

But it was found by the judge that the SEC failed to show why the SPIC should be forced to act.

Attorney for Stanford Group in Antigua & Barbuda Hugh Marshall said he had no insight to add to the subject since he was not familiar with the specifics of the ruling.

The SIPC is known to have handled the Bernard Madoff Ponzi scheme and had contended that Stanford's offshore bank – Stanford International Bank Ltd  through which most of the funds have been channeled, fell outside the span of its authority.

"The court is truly sympathetic to the plight" of the victims, Judge Robert Wilkins of the US District Court in the District of Columbia wrote in dismissing the SEC's case. "But this court has a duty to apply the SIPA statute as written by Congress."

Kate Freeman, spokesperson for the Stanford International Victims Group said the court’s decision has no effect on victims outside of the United States.

“It makes no difference whatsoever for the investors here in Antigua. Most of the payment would have gone to the American victims, it would not have gone to people outside of the US,” she said.

And while Freeman is sympathetic with the investors who stood to benefit, she is of the belief that challenges like these should be mounted in the interest of all victims and not a selected few.

She said, “I think that the way SIPC was going after, they basically left all the international investors on their own. I am hoping that now SIPC is out of the way the Americans would start working with the international victims as one united group and perhaps we could get something done.”

Freeman said there are other monies available that can be recovered for all victims.

Reports suggest that while Stanford's Texas-based brokerage Stanford Group Company was a SIPC member, its offshore bank was not. And in any case, SIPC said it was not chartered by Congress to combat fraud or guarantee an investment's value.

Director of the Stanford Victims Coalition, Angela Shaw was cited in a Reuters report on the subject as being “floored” by the decision.

Shaw is known for initiating the fight against the SIPC – a move that sparked “a lot of feelings” according to Kate Freeman, because a lot of the international investors thought that they were being abandoned by her.

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“I am hoping now that Ms. Shaw and the committee are working towards other ways of getting money and that they would work with the international victims because, at the end of the day, that's what we should have been doing from the very beginning,” Freeman said.

In the meantime, R. Allen Stanford is serving a 110-year prison sentence after he was convicted for running the US $7 billion Ponzi scheme.

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