Agency undecided on helping with Stanford losses
WASHINGTON — Louisiana victims allegedly bilked of their savings by Texas financier Robert Allen Stanford are getting increasingly frustrated by the delay of an agency deciding whether they can recoup some of their losses.
The Securities Investor Protection Corp. announced earlier in the year that it would decide by Sept. 15 on whether to make about 1,800 Louisiana investors — mostly from Baton Rouge, Lafayette and Covington — eligible to receive at least part of their savings back.
The agency that stands as the U.S. investors’ first line of defense is two weeks late in meeting its deadline.
And those who sank money into Stanford’s operation are getting increasingly nervous.
“Everyone is just desperately watching it,” said Jean Anne Mayhall, founder of the Louisiana Stanford Victims Group.
SIPC chairman Orlan Johnson said the organization needs more time because of the complex issues in the Stanford case.
Stanford stands accused of bilking investors of $7.2 billion, including $1 billion in Louisiana, charges he denies.
“We fully appreciate the gravity of this matter and remain committed to reviewing it thoroughly and with all deliberate speed,” Johnson said in a statement.
That isn’t soothing investors such as Pete Verbois, a 66-year-old former Exxon Mobil worker who lost about $650,000 with Stanford. Even if SIPC makes a decision, it will be awhile before any victims receive their money, Verbois said.
“It’s going to be a lot of red tape before they cut a check,” said Verbois, of St. Francisville. “It’s pretty frustrating.”
In June, the U.S. Securities and Exchange Commission determined that victims of Stanford should be eligible to recoup some of their losses from the SIPC’s special fund created by Congress. The SEC has threatened to sue SIPC if it decides otherwise.
The SIPC fund is replenished by member financial institutions. Federal law allows for each victim to receive up to $500,000 of their losses.
A source of frustration among the Stanford investors is that SIPC paid back $732.6 million to victims of convicted Wall Street swindler Bernard Madoff, Mayhall said.
SIPC has denied paying Stanford victims, saying that unlike in the Madoff case, investors actually received certificates of deposit, even though they eventually lost their money when the CDs became worthless.
“We have had to fight every step of the way for over two years to be granted the same coverage that Madoff victims received in two weeks,” Mayhall said.
Mayhall said she contacted SIPC, which meets four times a year, and was told that its next scheduled meeting is in December. She said an agency representative told her that the organization will make a decision before then.
U.S. Rep. Bill Cassidy, R-Baton Rouge, isn’t surprised by the SIPC delay, he said. The case is complex, with investors living as far away as South America, he said.
It took months for the SEC to make its determination too, Cassidy said.
“We all want the decision to be made yesterday,” Cassidy said. “On the other hand, it’s a pretty complicated case. It’s not to excuse it, it’s just to understand it.”