WASHINGTON, D. C. - July 3, 2012
The Securities Investor Protection Corporation today issued the following statement with respect to the court decision in the SEC suit seeking protection under the Securities Investor Protection Act for Stanford International Bank CD investors.
First, SIPC is grateful to the District Court for the time and effort it devoted to this important case.
This litigation was an unprecedented matter. SIPC entered into this process reluctantly and after great deliberation because the issues at stake were so fundamental to its mission.
As SIPC said from the beginning, the SEC had taken the unprecedented position that SIPC must provide financial guarantees for investors who chose to purchase CDs issued by an offshore bank in Antigua. If accepted, that position would have rewritten SIPC's 40-year mandate under the law.
SIPC's responsibility is to protect customers against the loss of missing cash or securities in the custody of failing or insolvent SIPC member brokerage firms. It was not created by Congress to combat misrepresentation or fraud or to guarantee an investment's value. SIPC is gratified that the court has now agreed with its position.
This decision notwithstanding, SIPC has great sympathy for the victims of this extraordinary Ponzi scheme that inflicted heartbreaking losses on thousands of people across the world.
Going forward, SIPC will continue its mission to protect the custodial function of a member firm in liquidation under the Securities Investor Protection Act. This means that SIPC protects customers against the loss of their securities and cash that are missing from the customer's brokerage account.