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SEC Denies 'Standing Down' in Stanford Probe

Securities and Exchange Commission staffers are denying they "stood down" in their investigation of accused fraudster Allen Stanford, according to a Congressman who attended a closed-door briefing on the case this morning.

Rep. Bill Cassidy, R-Louisiana, tells CNBC the alleged "stand down order," which was first reported by the New York Times early in the scandal, was one of the top concerns among members of Congress who requested the briefing.

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In February, the Times quoted an SEC attorney as saying that another government agency had told the SEC to stand down on its Stanford probe in 2006, a story that has rankled alleged victims ever since. But Cassidy says SEC staffers told members of Congress that the story was incorrect.

As CNBC has previously reported, the SEC asked the Department of Justice last June—not in 2006—for help in the investigation, at which point the DOJ asked to take the lead in the case. Rep. Cassidy, while stopping short of saying he was satisfied by the SEC's version of events, said "It appears it was more a question of sequencing than (the SEC) being told to stand down."

Also at the briefing, according to Cassidy, SEC staffers said the agency would recommend a court-appointed Receiver not pursue "clawback" claims against U.S. investors. The Receiver, Dallas attorney Ralph Janvey, has had control of Stanford's assets since the SEC filed suit against the firm in February. Janvey has already begun the process of seeking clawbacks of allegedly fictitious returns from some investors.

Staffers also confirmed the SEC is pushing Janvey to discount his fees by an additional 20 percent. Janvey raised eyebrows in May when he asked a federal court to approve nearly $20 million in fees and expenses for roughly three months' work. Members of Congress had demanded an audit of Janvey's expenses, but were told at the briefing that an audit may be more expensive than it is worth.

Rep. Cassidy said members of Congress must now decide what to do with the information the SEC has provided, including conferring with attorneys for Stanford investors. But, he said, "I appreciate the SEC coming forward and engaging in the conversation."

SEC spokesman John Nester confirmed that the briefing took place, and did not dispute Rep. Cassidy's account of the session. The agency's Inspector General completed an internal investigation of the SEC's conduct in the Stanford case last month, but the report on the investigation has not yet been disclosed despite multiple requests by CNBC under the Freedom of Information Act.