SEC Takes SIPC To Court Over Stanford Fraud Coverage

Law360, New York (December 12, 2011, 8:03 PM EST) -- The U.S. Securities and Exchange Commission said Monday that it has sued the Securities Investor Protection Corp. in Washington federal court, seeking to force the insurance agency to pay investors who lost money in Texas fraudster R. Allen Stanford's alleged $7 billion Ponzi scheme.

The SEC asked the court to order SIPC, a congressionally chartered securities insurer that compensates investors when a brokerage fails, to begin liquidating Stanford Group Co.'s assets to help cover investors' losses. SIPC also has a special reserve, paid into by member...
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