RELEASE: Miss. Delegation Members Call for SEC to Appeal Ponzi Scheme Ruling
WASHINGTON – Members of Mississippi’s congressional delegation, including U.S. Senators Thad Cochran, R-Miss., and Roger Wicker, R-Miss., and U.S. Representatives Gregg Harper, R-Miss., Alan Nunnelee, R-Miss., and Steven Palazzo, R-Miss., today called on Securities and Exchange Commission (SEC) Chair Mary Jo White to appeal a recent ruling by the U.S. Court of Appeals regarding the Ponzi scheme perpetrated by R. Allen Stanford.
The court found that thousands of investors who were cheated in this Ponzi scheme, including many Mississippians, are not eligible for financial compensation.
The full text of the letter:
Dear Chair White:
We are writing at the request of our Mississippi constituents who were profoundly and adversely affected by the Ponzi scheme perpetrated by R. Allen Stanford. These Mississippians are among thousands of investors across the country who lost billions of dollars in this Ponzi scheme. On their behalf, we respectfully request that the Securities and Exchange Commission (SEC) file an appeal with the U.S. Supreme Court, seeking to overturn the ruling of the U.S. Court of Appeals, District of Columbia Circuit, in the matter of SEC v. SIPC.
As you know, the U.S. Court of Appeals last month ruled that the approximately 7,000 investors in certificates of deposit sold by Mr. Stanford were not eligible for the insurance coverage that the Securities Investor Protection Corporation (SIPC) ordinarily extends to defrauded investors. The judge’s ruling was a huge disappointment to these investors, especially when you consider that Mr. Stanford was convicted of multiple accounts of wire fraud, mail fraud, and other charges. He currently is serving a 110-year prison sentence for his misdeeds, and his Ponzi scheme is one of the largest in history.
Congress passed the Securities Investor Protection Act of 1970 (SIPA) in order to enhance investor confidence by protecting customers of SIPC-member broker dealers. It is difficult to draw a meaningful distinction between our constituents and the victims of other Ponzi schemes in which the victims were deemed eligible for SIPC coverage. However, investor confidence may suffer if investors perceive that they cannot consistently rely on SIPC to protect them when they are swindled by the owner of a SIPC-member firm.
We applaud your efforts to date to seek justice for our constituents, and we encourage you to continue to back the SEC’s original position that many of the Stanford victims are entitled to SIPC coverage. We note, too, that the final outcome in the case will set an important legal precedent.
For all of these reasons, we respectfully urge you and the rest of the Commission to act promptly to appeal last month’s ruling by the U.S. Court of Appeals. Thank you for your attention to this matter.