U.S. Senator Thad Cochran (R-Miss.) today said he believes that a legal appeal should be filed to try to overturn a federal court ruling that would deny compensation to victims of the multi-billion fraud perpetrated by the Stanford Financial Group.
Cochran is one of 14 Senators who have signed a letter encouraging Mary Schapiro, chairwoman of the Securities and Exchange Commission (SEC), to promptly file an appeal to a recent U.S. district court decision which determined victims of the Stanford fraud cannot be compensated through the Securities Investor Protection Corporation (SIPC).
"The Securities and Exchange Commission should not give up the fight to secure some measure of compensation for those who lost their savings in the Ponzi scheme perpetrated by the Stanford Group," Cochran said.
The letter, which was authored by Senator David Vitter (R-La.), expresses disappointment in U.S. District Judge Robert Wilkins' recent ruling in favor of the SIPC. Congress established the SIPC in 1970 to recoup losses, within certain limits, from bankrupt or financially-troubled brokerages. To date, Stanford Financial Group victims have not been found to be qualified for SIPC relief.
"If investors cannot depend on SIPC to protect them when their savings are stolen by the owner of a SIPC-member firm--due entirely to a hyper-technical interpretation of the statute--investor confidence will suffer and render SIPC protection meaningless," the letter said.
It goes on to say, "The ultimate outcome of this court case will set a significant legal precedent for investors who rely on introducing broker dealers to safely invest their life savings. This is a very important legal matter as introducing broker dealers make up a significant majority of SIPC's membership. Whether or not the SEC can compel SIPC to act is a significant legal issue that merits consideration by more than a single District Court Judge."
Along with members of the Mississippi congressional delegation and others in Congress, Cochran has urged the SEC and the SIPC to agree to compensate victims from 46 states, including some in Mississippi, who lost more than $7.2 billion in the Stanford Ponzi scheme.
In addition to Vitter and Cochran, the letter to SEC Chairwoman Shapiro was signed by: Roy Blunt (R-Mo.), John Boozman (R-Ark.), Robert Casey (D-Pa.), Saxby Chambliss (R-Ga.), Kay Bailey Hutchison (R-Texas), Johnny Isakson (R-Ga.), Mark Kirk (R-Ill.), Mary Landrieu (D-La.), Claire McCaskill (D-Mo.), Bill Nelson (D-Fla.), and Roger Wicker (R-Miss.).