Stanford's Victims, Part 2
by: Andrew Schneider, March 20, 2012 10:03:00 am
Last year, the Securities & Exchange Commission ruled the Securities Investor Protection Corporation liable for the losses of Stanford investors. Stanford Group Company, the Houston-based broker-dealer that sold certificates of deposits in Stanford International Bank, was a SIPC member. The SEC is now suing SIPC to force it to comply.
Stephen Harbeck is SIPC's president. He says it's clear Stanford's victims suffered a terrible wrong. But he says correcting that wrong is not SIPC's responsibility.
"The losses are in the billions of dollars, more money than SIPC has, and we view this as a dramatic changing of our mission by the SEC."
Harbeck says SIPC's mandate is strictly to make good on funds in the hands of brokers. That's why SIPC helped investors in the case of Bernie Madoff, the only Ponzi scheme larger than Stanford's.
"Contrast that with the Stanford situation, where the Stanford victims instructed them to send their cash to the nation of Antigua, where he had a bank, and that bank issued them physical securities."
Harbeck says the proper place for Stanford's victims to seek relief is with SEC-appointed receiver Ralph Janvey and accounting firm Grant Thornton, court-appointed liquidator for Antigua. The two are competing to recover hundreds of millions of dollars from Stanford accounts scattered around the world. Kevin Sadler of Baker Botts is Janvey's lead attorney.
"Although we've tried very hard to find a way to reach agreement with the court-appointed folks from Antigua, it's just proved to be impossible given their desire to take control of literally all the foreign assets and bring them back to Antigua."
Marcus Wide is one of two Grant Thornton accountants named as Stanford's liquidators by Antigua.
"At this point, the suggestion from the US receiver is that he doesn't need our help. All he wants to do is to share some information and proceed on that basis. The fact there are large contingency fees out there to be earned may be some part of that problem."
Angela Shaw, founder of the Stanford Victims Coalition, says the fight between the US receiver and the Antiguan liquidator risks consuming whatever funds Stanford left behind.
"This international turf war has cost investors tens of millions of dollars."
Shaw's group is pursuing restitution on other fronts as well. Yesterday, a federal appeals court in Houston gave the green light to a trio of class action suits the group has filed against individuals and companies it claims aided in the Stanford scheme. But the court battles over Stanford's assets could potentially drag on for years. Given the number of investors who are retirees, that's time many of the victims don't have.