SIPC to Counter SEC Appeal

Jack Humphrey, Regulatory journalist
September 03, 2012 /

The Securities Investor Protection Corporation will continue to defend itself from the US Securities and Exchange Commission’s insistence that it provide financial guarantees for investors who bought offshore CDs issued by an Antiguan bank.

The federal court previously rejected the SEC’s request, but the securities regulator is appealing that decision.

“As we have stated from the beginning, we have enormous sympathy and respect for the victims of the Stanford fraud,” said Stephen P. Harbeck, President of the Securities Investor Protection Corporation.

After a thorough analysis, the SIPC concluded that the SEC’s “unprecedented theory that SIPC should provide financial guarantees for investors who chose to purchase CDs issued by an offshore bank in Antigua was in clear conflict with the agency’s Congressionally mandated responsibilities.”

SIPC entered into the litigation reluctantly, after great deliberation, because the issues at stake were so fundamental to its charter, it said in a statement.

Acting as a trustee, the SIPC protects customers from the loss of missing cash and/or securities in their customer accounts when a member broker-dealer fails financially. But the SIPC was not chartered by Congress to combat fraud or to guarantee the value of bank investments.

“While SIPC continues to have great sympathy for the victims of the Stanford Antiguan bank fraud, SIPC must continue its mission of protecting the custodial function of member securities brokerage firms under the Securities Investor Protection Act,” it said.


1 Comment for “SIPC to Counter SEC Appeal”

  1. Bobby Allison

    I hope the clients get their money back…..BUT is SIPC really responsible? No! THE SEC is. Seven whistle blowers go to the SEC. FINRA, and the States from 1997 to 2005, Over eight-hundred regulator beauracrats sitting in their butts in Texas alone. The SEC audited Stanford twice and did nothing….or could not find any troubling issues! Are you kidding me!!!!!!! MAKE the SEC pay and others. Absolutely mind blowing!

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