In a recent blog post (http://www.whitesecuritieslaw.com/2011/11/17/recovery-of-stanford-group-investment-losses-through-finra-arbitration/), we gave an update on the potential for recovery for investors who bought fraudulent Certificate of Deposit (CD) investments from R. Allen Stanford’s Stanford Group Co. Our firm is investigating the potential for recovery of investment losses though FINRA arbitration in claims against the financial professionals that sold the investments.
Additionally, investors have 2 other main avenues through which they are hoping for recovery. The first is through the court ordered receivership and the second through the SIPC. The Securities Investor Protection Corporation (SIPC) can offer up to $500,000 in coverage to accounts with member firms. The SIPC initially denied coverage to investors who purchased CD’s from Stanford, but in June the SEC urged them to reconsider and threatened legal action.
The SIPC has remained largely silent since they promised to reconsider the SEC’s request during a board meeting in September. However, CNBC is now reporting that in a recent letter to Congress, the SIPC continues to contend that they are not responsible for the Stanford accounts.
Investors and the SEC believe that the SIPC should cover the losses because, “…most of the CDs were purchased through Stanford’s U.S. broker-dealer, a SIPC member.” According to CNBC, The SIPC told congress that “providing the coverage would be ‘unprecedented,’ because the investors ‘chose to purchase CDs issued by an offshore bank in Antigua,’ which is not covered by SIPC.” The letter also stated that there is “fundamental disagreement” between themselves and the SEC on this matter.
The SIPC and the SEC are apparently engaging in private discussion about the Stanford issue which CNBC said is “apparently are aimed at settlement to avert a lawsuit by offering a partial payout to investors.” CNBC also reported that both some members of Congress and investors may push the SEC to take legal action for full coverage sooner than later, while securities industry trade group, SIFMA, has made statements that it agrees with the SIPC that they are not responsible for covering the fraud losses.
The White Law Group will continue to carefully monitor this situation and how it impacts investors. If you invested in a Stanford Certificate of Deposit (CD) investment and would like to speak to a securities attorney about your potential to recovery investment losses through a FINRA dispute resolution claim please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.