Senator Lifts Hold On SEC Nominations After SIPC Decision
A day after saying he would block the nominations of two Securities and Exchange Commission members, Louisiana Sen. David Vitter lifted the hold Wednesday.
The move came after the SEC said the thousands of investors in the alleged Allen Stanford Ponzi scheme should be entitled to insurance coverage under the federal law that protects U.S. brokerage clients.
The Republican had planned to block the nominations until the agency made a determination on the SIPC issue. At the time he said the investors "at least deserve a direct answer on their request for coverage."
Some 28,000 investors lost billions of dollars when the SEC shut down the Stanford Financial Group in 2009.
The Securities Investor Protection Corporation, or SIPC, has thus far refused to provide coverage for the Stanford investors, since the investments—allegedly bogus certificates of deposit—were issued by an offshore bank.
But many of the investors bought the CDs through Stanford's U.S. brokerage—a member of SIPC—and they argued they should be entitled to coverage, which can lead to cash payments of up to $500,000 per customer.
On Wednesday, the SEC agreed with the investors, saying the brokerage firm "failed to meet its obligations to customers," and formally requesting that SIPC begin the process of covering the investors.
The Commission, which oversees SIPC, said if SIPC does not comply with the request, it will go to court.
In a statement, SIPC President and CEO Stephen Harbeck said the board would review the SEC's request and respond "as quickly as possible."
A spokesperson for the largest group representing Stanford investors—the Stanford Victims Coalition—says the coverage could make many victims whole.
Thus far, investors have recovered just pennies on the dollar.