From a release out of Sen. David Vitter’s office today comes some news that the Senator’s announcement he was placing a hold on a couple of Securities and Exchange Commission nominees until the SEC agreed to cover the losses of Stanford Group fraud victims through the Securities Investor Protection Corporation. That’s a pretty significant win for some folks who have been through hell since the Houston-based firm, whose Baton Rouge offices served a big chunk of the city’s investor class, imploded.
“This is big, big news,” said Vitter. “Many of these folks in Louisiana and along the Gulf region lost their life savings, and the SEC’s ruling today is certainly gratifying for the victims. There will likely be litigation, and no one will be getting a check in the mail tomorrow, but still – a huge step and a sigh of relief for many. I’ll continue working with the SEC until the victims have complete clarity of the process and I urge the SIPC Board of Directors to take up the issue and not to drag out a decision. I asked for an up-or-down answer from the SEC on SIPC, so consequently, I’m releasing my hold on Daniel M. Gallagher and Luis Aguilar.”
“I speak for all of the victims, their children and families when I say how pleased we are with the SEC’s determination that SIPC protection be extended to our victims,” said Jean Anne Mayhall, Founder of Louisiana Stanford Victims Group. “It has been a long time coming, but we were always confident that once presented with the facts and given the overwhelming Congressional support for our plight, the Commission would use the laws we have in place to help Stanford Group Company customers.”
“There are no words to amply express the gratitude we feel toward Senator David Vitter and his staff who have worked tirelessly since early 2009 on this case. Without the guidance, patience and experience of Senator Vitter, I do not think the 1,800 victims in my state would have seen this historic day,” Mayhall added.
At a U.S. Senate Banking Committee hearing last year, Vitter raised concerns about the SEC’s misleading statements about its handling of the Stanford case. An Inspector General’s report showed the SEC’s examination office had been looking into the Stanford Group since 1997 and were concerned it was a “possible Ponzi scheme,” but at a previous banking committee hearing, SEC officials claimed the investigations only began in 2004.
The SEC has five commissioners who are appointed by the President with the advice and consent of the Senate. Mr. Daniel M. Gallagher has been nominated to fill the seat being vacated by Commissioner Kathleen Casey and the Honorable Luis Aguilar is being re-nominated because the term for which he is now serving expires June 5, 2010. Yesterday following a U.S. Senate Banking Committee hearing, Vitter raised concerns that because the Commission was so close to a ruling, bringing a new commissioner into the mix would unnecessarily slow down the pace.
UPDATE: Rep. Bill Cassidy, in whose district an enormous amount of the Stanford damage was done, weighed in…
“Today’s decision by the SEC to compensate eligible victims of the Stanford Ponzi scheme is the successful culmination of a process that has dragged on for two years. Recently, I participated in a Congressional hearing which brought the voices of Stanford victims across America into the public debate.
“These victims worked hard, saved and lived within their means, and today the financial security that was stolen from so many has been returned. This was a process that would have not succeeded without the tireless advocacy of Stanford’s victims throughout Louisiana and the country. These victims have begun to be vindicated and I will continue to monitor SIPC to ensure it follows through with its obligation.”
UPDATE #2: Rep. Charles Boustany put out something on the decision as well…
“After many bureaucratic delays, the wheels of justice are finally moving on this case,” Boustany said. “I have advocated on behalf of the victims of this massive Ponzi scheme, and our efforts in Washington have finally paid off. I am pleased the SEC took the actions necessary to compensate the victims of this scheme.”
According to the SEC, “based on the totality of the facts and circumstances of the case…Securities Investor Protection Corporation member Stanford Group Company (SGC) has failed to meet its obligations to its customers. The Commission…therefore is making a formal request to the SIPC Board of Directors to take necessary steps to institute a liquidation proceeding of SGC.” The Commission also asked the Securities Investor Protection Corporation (SIPC) to initiate a court proceeding under SIPA to liquidate the broker-dealer.
Congressman Boustany has been active in the fight for victims of the Stanford Ponzi scheme. In April, he demanded answers from the SEC on their efforts to assist Stanford victims. The SEC response defended their two-year investigation but provided no further details. Congressman Boustany also introduced the Ponzi Scheme Victim’s Tax Relief Act of 2011 with Representative Bill Pascrell, Jr. (D-NJ). The bill expands the net operating loss carryback period for investors in a Ponzi-type scheme from five to 10 years. Victims who lost money in a Ponzi scheme can recoup the losses by declaring them as net operating losses during previous tax years and collecting refunds from those tax years.