Judge Blocks SEC Suit On Behalf Of Stanford Investors

A federal judge is rejecting a Securities and Exchange Commission lawsuit seeking relief for investors in R. Allen Stanford's $7 billion Ponzi scheme.

The SEC sued the Securities Investor Protection Corporation in December, trying to force it to compensate investors who lost money in the scheme. SIPC runs an industry-funded reserve fund that protects customers of failed brokerage firms. It claimed the bank in Stanford’s scheme did not qualify.

A federal judge ruled that the SEC failed to prove that the investors were “victims” under the narrow definition of the law, but said the court is sympathetic to their plight.

The SEC says it is reviewing the decision. It has sixty days to decide on an appeal.

Last month, Stanford was sentenced in a Houston court to 110 years in federal prison.

Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...