| WASHINGTON, July 11
WASHINGTON, July 11 A bipartisan group of U.S.
lawmakers is urging President Barack Obama to nominate directors
to an industry-backed organization who will help the victims in
Allen Stanford's $7 billion scheme try to recover some of their
In a letter from 10 members in the House of Representatives
and a separate letter from a Republican senator, the lawmakers
said they believe the Securities Investor Protection Corp (SIPC)
needs a cultural overhaul that will put investors' interests
"We encourage you to take this opportunity to advance
nominees that prioritize protecting investors over the bottom
line of Wall Street," wrote 10 Republican and Democratic House
"The victims of the Stanford Ponzi scheme cannot afford to
continue with the status quo. New perspectives are required in
the SIPC to protect the interests of these victims moving
SIPC President Stephen Harbeck said his organization will
determine what response it will make early next week.
The SIPC is a corporate non-profit that administers a fund
paid for by Wall Street to compensate investors if a brokerage
It is currently locked in a legal battle with the U.S.
Securities and Exchange Commission over whether Stanford's
investors are eligible under federal law to file claims for
In an unprecedented case, the SEC decided to take legal
action against the fund and force SIPC to start court
proceedings for victims to file claims.
The SEC lost the battle in 2012, when a U.S. district court
agreed with SIPC that Stanford's investors did not meet the
legal definition of "customer" and were not entitled to seek
The SEC appealed and made its case before the U.S. Court of
Appeals for the District of Columbia in October last year. A
ruling has not been issued.
Stanford is serving a 110-year prison after being convicted
in 2012 of bilking investors with fraudulent certificates of
deposit issued by his Antiguan-based Stanford International
Although the case dates back to 2009, the plight of
investors is still reverberating on Capitol Hill.
Many of the lawmakers who are upset about the issue have
victims who reside in their state or district.
Moreover, five directors on SIPC's seven-member board must
be appointed by the president and confirmed by the U.S. Senate.
Currently there are four open SIPC positions, including one
that became vacant after the recent departure of SIPC Acting
Chair Sharon Bowen. She left to become a commissioner at the
Commodity Futures Trading Commission.
Bowen was confirmed in a narrow 48-46 vote, with many
lawmakers voting against her because of concerns over how SIPC
has handled the Stanford matter.
Louisiana Republican Senator David Vitter, who also sent a
letter to Obama on Friday, said the new head of SIPC must not
come from the industry and should be pro-investor.
He also chastised SIPC, saying it has spent $3.3 million to
fight the SEC.
(Reporting by Sarah N. Lynch; Editing by Jonathan Oatis)