Talk about timing.
The U.S. Securities and Exchange Commission today announced that victims of Allen Stanford's Ponzi scheme are entitled to the protections of the Securities Investor Protection Act of 1970, which means they may be entitled to get their money back.
The news comes a day after the Washington Post reported that Sen. David Vitter (R-La.) was blocking President Obama's two nominees to serve as SEC commissioners until the agency made a decision on the issue.
“We’ve known for some time that the SEC waited far too long to take action against Allen Stanford, and now they’re dragging their feet in responding to the victims,” Vitter said in a statement.
According to its 2009 complaint, the SEC alleged that Allen Stanford operated a Ponzi scheme in which certain investors were sold certificates of deposit issued by Stanford International Bank Ltd. through the Stanford Group Company.
The Stanford Group Company is a member of the Securities Investor Protection Corporation, which was chartered by Congress to restore funds to investors with assets in the hands of bankrupt and otherwise financially troubled brokerage firms.
The SEC determined that investors with brokerage accounts at the company who purchased the CDs through the broker-dealer qualify for protected “customer” status under the Securities Investor Protection Act.
According to the SEC, the liquidation proceeding will allow investors with accounts to file claims with a trustee. The trustee would decide whether the investors have “customer” claims that are protected by the statute. An investor who disagreed with the trustee’s determination could seek court review.
Obama nominated Wilmer Cutler Pickering Hale and Dorr partner Daniel Gallagher Jr. to be a commissioner, and current SEC commissioner Luis Aguilar to serve a second term.
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