Many investors in Louisiana and Gulf region lost their life savings
WASHINGTON -- Sen. David Vitter, R-La., placed a hold Tuesday on President Barack Obama's nomination of two new members of the Securities and Exchange Commission until the SEC decides whether to extend Securities Investor Protection Corporation coverage to investors, many of them in Louisiana and along the Gulf, who were defrauded by Allen Stanford.
Sen. David Vitter announced that he will block the nominations of two Securities and Exchange Commission members until the SEC responds to a request by victims of the alleged Stanford Group Co. Ponzi scheme who are seeking to receive Securities Investor Protection Corporation coverage for their losses."Unfortunately, the SEC has not yet given the Stanford victims an answer despite my repeated conversations with Chairwoman Mary Schapiro," said Vitter. "Many of these folks in Louisiana and along the Gulf region lost their life savings, and they at least deserve a direct answer on their request for coverage. After months of delay the commission has now met a number of times to consider SIPC coverage for Stanford's victims. It would be salt in the wound of these victims for Congress to force those discussions to start over by approving new commissioners."
The Senate Banking Committee held a hearing Tuesday on the nominations of Luis Aguilar of Georgia and Daniel Gallagher of Maryland to be SEC commissioners, as well as the nomination of Anthony Frank D'Agostino of Maryland, and Gregory Karawan, of Virginia, to be directors of the SIPC.
The Vitter hold only applies to the two SEC nominees.
"We've known for some time that the SEC waited far too long to take action against Allen Stanford, and now they're dragging their feet in responding to the victims," said Vitter. "I will continue to hold them accountable - including holding these nominations - until these fraud victims get an up-or-down answer from the SEC on SIPC so they can move forward in the process, and if necessary, file a judicial appeal."
Vitter was traveling back to Washington Tuesday and did not arrive in time for the Banking Committee hearing.
But, during his opening remarks, Sen. Richard Shelby, R-Ala., the ranking Republican on the committee, addressed the SEC's and SIPC's role with regard to both the fraud committed by Bernie Madoff and the Stanford Group.
Noting that the SEC "recently restructured its enforcement and compliance programs to address some of the systemic problems that enabled Bernie Madoff and Allen Stanford to defraud thousands of investors for years without being caught," Shelby said that those cases have "put a spotlight" on the SIPC's "responsibility for assisting customers of failed brokerage firms."
"The Madoff liquidation has been at the heart of SIPC's work over the past several years and is much bigger than anything SIPC has dealt with in its four decade history," said Shelby. "As for the Stanford case, SIPC has taken the position that coverage under the Securities Investor Protection Act is not appropriate. The defrauded Stanford victims have asked the SEC to consider the propriety of that decision. The SEC's delay in making a decision is harming investors who already were harmed by the SEC's failure to prevent the Stanford fraud. It is my hope that the SEC will stop delaying and make a final decision as quickly as possible."