Allen Stanford Ponzi Scheme

[scion]

David Vitter testifies that Stanford fraud victims' rights ignored

Published: Wednesday, March 07, 2012, 10:51 AM
By Bruce Alpert, Times-Picayune The Times-Picayune
http://www.nola.com/politics/index.ssf/2012/03/david_vitter_tells_house_subco.html

WASHINGTON -- Sen. David Vitter, R-La., today told a House hearing that the agency set up to protect investors from fraud is more a captive of the financial industry than a financial regulator protecting investors. Vitter was testifying to the House Capital Markets and Government Sponsors Enterprises Subcommittee this morning about the victims, a good number from Baton Rouge, who were defrauded by Texas investment broker R. Allen Stanford. The government has estimated that investors lost about $7 billon.

A Texas jury found Stanford guilty of 13 of 14 charges Tuesday, including conspiracy, wire and mail fraud. Prosecutors hope to seize $300 million in foreign assets but that's only a tiny fraction of the money owed investors.

That's where the industry financed Securities Investor Protection Corp. is supposed to come in. But Vitter said the corporation has resisted efforts by investors to be partially reimbursed for their losses from the SIPC.

"I fear we are in a situation where, if SIPC were a true financial regulator, we would call it regulatory capture," Vitter said in his testimony. "The actions of SIPC are dictated by the member companies rather than by the law. SIPC is functioning more like a trade association and advocate than a quasi-regulator."

Vitter said he first got involved in the Stanford matter after hearing from victims of his fraudulent schemes.

"Allen Stanford was adept at preying upon the savings of retired oil and gas workers in Louisiana, in particular," Vitter said. "Many of the victims have told me their entire savings has been lost because of the Stanford fraud and that they have been forced to sell their homes and re-enter the work force."

Stanford is accused of using investor money that was supposed to be used to purchase foreign certificates of deposits and instead pocketing the money himself.

The Securities and Exchange Commission has begun litigation against the SIPC to force it to compensate victims for some of their losses. Vitter had urged the commission to take the action, accusing the SIPC of trying "every conceivable idea to drag out making a final determination."

http://www.nola.com/politics/index.ssf/2012/03/david_vitter_tells_house_subco.html