The Securities Investor Protection Corp.’s emergency fund is not available to people who were fleeced of billions of dollars by Houston swindler Robert Allen Stanford, an appellate court has ruled.
The decision by the U.S. Circuit Court of Appeals for the District of Columbia rocked people who invested with Stanford’s companies from Baton Rouge to the Atlantic and Pacific coasts.
“Nobody takes any great pleasure in this,” SIPC President Stephen Harbeck said Monday. “But this was just outside the scope of the (SIPC) law.”
SIPC was created by Congress in 1970 to protect investor money placed with brokerages that failed without ever having purchased the securities selected by their customers. SIPC’s member brokers pay annual fees into the safety net intended to protect such investors.
Stanford, 64, is serving a 110-year prison term for his 2012 conviction on multiple counts of mail and wire fraud related to between $5.5 billion and $7 billion in losses by more than 20,000 investors in the U.S. and more than 100 other countries.
Stanford’s victims won’t get any SIPC relief the way victims of New York swindler Bernard Madoff did. Madoff confessed in 2008 to stealing more than $17 billion from his investors over a period of decades and is serving a 150-year prison term.
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