SEC: Investors should be compensated from fund
HOUSTON — The U.S. Securities and Exchange Commission has said that many investors who lost money in the alleged Ponzi scheme run by jailed Texas financier R. Allen Stanford should be compensated by a special reserve fund mandated by Congress that protects customers of failed brokerage firms.
Mississippians had a total of about $391 million invested with three Stanford offices in Jackson, Columbus and Tupelo, with about $33 million of that money invested in CDs.
The SEC’s conclusion differs from a decision by the Securities Investor Protection Corporation, or SIPC, the group that runs the reserve fund. SIPC is an industry-funded group that was created by Congress in 1970, and guarantees up to $500,000 per investor in the event of a firm’s failure. SIPC had said two years ago that Stanford’s investors were not eligible for such compensation.
SIPC said it would take the SEC’s decision under advisement before deciding how to proceed.
“SIPC’s Board will review the referral, and analyze the SEC’s underlying documentation as quickly as possible,” SIPC President and CEO Stephen Harbeck said in a statement.
An attorney for Stanford did not immediately return a telephone call seeking comment.
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