WASHINGTON, March 28 A U.S. senator questioned a
candidate for the Commodity Futures Trading Commission over a
decision that left victims of the Allen Stanford fraud out of
pocket, raising a hurdle she must jump to get the job.
In a letter on Friday, Louisiana Republican David Vitter
asked Sharon Bowen - who has been nominated by President Barack
Obama to join the derivatives regulator - a series of 10
questions about her role in the decision.
Bowen is the acting head of the Securities Investor
Protection Corporation (SIPC), the body that seeks to recoup
money for investors if their broker goes under.
SIPC holds there is no basis in law to refund people who
lost money in the $7 billion Ponzi scheme set up by Allen
Stanford, who is serving a 110-year jail sentence.
The Securities and Exchange Commission (SEC) lost a court
case in which it contested that decision, though an appeal in
the case is still pending. A group of 14 senators and fraud
victims are supporting the SEC's legal fight.
"It seems that SIPC continues to prioritize protecting its
Wall Street members by hiring lawyers to fight the SEC in court
rather than protect investors," Vitter said in his letter.
SIPC, created under the Securities Investor Protection Act
(SIPA), is funded by Wall Street firms.
Vitter also asked whether SIPC had received any outside
funding for its legal defense, whether its decision had been
influenced by the banks, and wanted to know whether Bowen had
received any gifts while at SIPC.
Bowen and two other nominees to the five-strong CFTC met
little pushback in a Senate committee at a confirmation hearing
on March 6, but it is no surprise that the Stanford scandal is
coming to haunt Bowen. Thad Cochran, the highest-ranking
Republican on the Committee, mentioned the scandal during the
meeting, though he did not pursue the issue.
The agency - down to just two Commissioners, one Democrat
and one Republican - is facing a leadership vacuum just as it is
implementing some of the most fundamental reforms of financial
markets after the 2007-09 credit meltdown.
Once a little-watched agency policing agricultural and other
futures, it has now taken on the $690 trillion global swaps
market, dominated by Wall Street's biggest banks.
(Reporting by Douwe Miedema; Editing by Andrea Ricci)