WASHINGTON — U.S. Rep. Bill Cassidy wrote Thursday to the chairwoman of the Securities and Exchange Commission asking for the SEC to appeal last week’s federal court ruling that the investors defrauded by Houston financier Robert Allen Stanford are not covered by the Securities Investors Protection Corp.
Last week’s ruling was bad news for Stanford investors who lost billions of dollars in Louisiana and across the nation. The decision also represented the first time Securities Investors Protection Corp., or SIPC, had ever refused a request by the SEC to cover individual investors for up to $500,000 of their losses.
SIPC is funded by the financial services industry.
Cassidy, R-Baton Rouge, wrote that the potential financial restitution was “the last hope for many of Stanford’s victims to regain that which was taken from them more than three years ago.”
“As the … representative for the area perhaps hardest-hit by this tragedy, I have been confronted almost daily since my service began in 2009 with the heartbreaking stories and tragic outcomes that have befallen my constituents affected by Stanford,” Cassidy wrote to SEC Chairwoman Mary Schapiro.
Last week, Sen. David Vitter, R-La., also urged Schapiro to consider every possible appeal option.
Stanford, 62, is serving a 110-year prison term for his jury conviction this year on charges that he led a fraudulent scheme used to swindle more than $7 billion from approximately 25,000 investors in the United States and more than 100 other countries.
About 1,000 Stanford investors in the Baton Rouge, Lafayette and Covington areas, estimated by Baton Rouge attorney Phillip W. Preis and state Sen. Bodi White, R-Central, suffered a combined loss of $1 billion.
The SIPC offered last year to settle the dispute with the SEC by covering up to $250,000 of individual Stanford investor losses.
After the SEC went to court for the whole $500,000, the SIPC argued that such coverage could drain its $1.2 billion fund, forcing increased fees from its members.
Cassidy’s letter also contained a correspondence from Stanford victim and St. Tammany Parish resident Jean Anne Mayhall who wrote to other victims about the court ruling that she described as narrowly tailored and inappropriate.
“It is my very humble opinion that if Judge (Robert) Wilkins’ ruling is allowed to stand, the victims and their families will have been sentenced along with the criminal,” Mayhall wrote.
“I hope that the SEC will appeal this decision. With vigor, with authority, and with a platform based upon all aspects of this case, including the facts and the law,” she continued. “To do less puts all citizens who still trust the United States financial system at risk, and at the mercy of the ever-growing interpretive power of SIPC.”
The SEC has until early September to file a notice of appeal. An SEC spokesman said last week that the SEC was reviewing the court decision concerning whether to appeal.