Support SIPC in its SEC Case on Stanford
160 Letters and Emails Sent So Far
The NAIBD serves as an advocate for the Broker/Dealer community. It is our mission to positively impact rules, regulations, and legislation by facilitating a consistent, productive relationship between industry professionals and regulatory organizations and by providing education and member benefits for Broker/Dealers.
Today, we are writing to express our support of Securities Investor Protection Corporation’s (“SIPC”) stance versus the SEC in the unprecedented lawsuit demanding SIPC guarantee the value of offshore certificates of deposit issued by Stanford International Bank Ltd (“Stanford”). Our position is based on the facts, which include the legal limitations of SIPC protections, the allegedly fraudulent circumstances surrounding the losses incurred by Stanford investors, and the physical nature of the securities issued to Stanford investors.
SIPC’s own website clearly articulates their and our positions:
“The Securities Investor Protection Corporation was not chartered by Congress to combat fraud.”
http://www.sipc.org/who/whysipc.html
We do not believe that SIPC or the brokerage industry should provide a backstop for events that transpired outside of the United States, for fraudulent investment schemes, in instances in which investors sought unrealistically high returns, and/or when physical certificates, however worthless, remain in the possession of investors.
In summary, we believe that covering the Stanford customers through SIPC is a misfit solution that sets an unsustainable precedent for the future. NAIBD encourages its members and the broad securities industry to express its support to SIPC by signing onto the petition below.
Today, we are writing to express our support of Securities Investor Protection Corporation’s (“SIPC”) stance versus the SEC in the unprecedented lawsuit demanding SIPC guarantee the value of offshore certificates of deposit issued by Stanford International Bank Ltd (“Stanford”). Our position is based on the facts, which include the legal limitations of SIPC protections, the allegedly fraudulent circumstances surrounding the losses incurred by Stanford investors, and the physical nature of the securities issued to Stanford investors.
SIPC’s own website clearly articulates their and our positions:
“The Securities Investor Protection Corporation was not chartered by Congress to combat fraud.”
http://www.sipc.org/who/whysipc.html
We do not believe that SIPC or the brokerage industry should provide a backstop for events that transpired outside of the United States, for fraudulent investment schemes, in instances in which investors sought unrealistically high returns, and/or when physical certificates, however worthless, remain in the possession of investors.
In summary, we believe that covering the Stanford customers through SIPC is a misfit solution that sets an unsustainable precedent for the future. NAIBD encourages its members and the broad securities industry to express its support to SIPC by signing onto the petition below.
Enter Your Name and Submit to Sign
The SEC is taking the position that SIPC must provide financial guarantees for investors who chose to purchase CDs issued by an offshore bank in Antigua, rather than securities.
Expanding SIPC coverage to investments held outside of a Broker/Dealer would put SIPC's reserve fund at risk.
SIPC covered Madoff investors because investors were issued statements showing their assets were held at Bernard L. Madoff Investment Securities LLC. I don't believe Stanford Capital Management, LLC, the registered Broker/Dealer and Investment Adviser of Robert Allen Stanford, was holding anything.
Expanding SIPC coverage to investments held outside of a Broker/Dealer would put SIPC's reserve fund at risk.
SIPC covered Madoff investors because investors were issued statements showing their assets were held at Bernard L. Madoff Investment Securities LLC. I don't believe Stanford Capital Management, LLC, the registered Broker/Dealer and Investment Adviser of Robert Allen Stanford, was holding anything.
SIPC should not pay, SEC is dumping their responsibility once again.
If the SEC wins this suit, it will encourage every client that is looking for ways to skirt the system to flirt with unrealistic products. Even if a client thinks it's "too good to be true," they will have the comfort of knowing that "Oh well, even if it is fraud, I'll still get backed up by SIPC. This guy/gal will go to jail, which is fine, but at least I'll be made whole on my money." Sure, this will put a cap on what "smart" investors will put into shady deals...they'll only put what SIPC will insure. This is a dam that, if broken, will allow the fraud waters to flow freely.
I've read the SEC filing and understand the SIPC position but if you do the research and listen to the testimony, yep SIPC needs to pay up or my clinets will start putting money into the bank brokerage companies. People will not trust the independent broker amnd will look for deeper pockets. SIPc is acting like any health insurance firm looking for excuses to deny coverage
give the money and shut up
The SEC suit is such a waste of time and money. SIPC was never intended to cover a bad investment. If so, broker-dealers should be able to advertise that SIPC will cover any investment loss. Mary Schapiro knows this and should be ashamed! This smells like an Obama move, once again, to save people from their own foolish actions and subsequent consequences!
The SEC suit is such a waste of time and money. SIPC was never intended to cover a bad investment. If so, broker-dealers should be able to advertise that SIPC will cover any investment loss. Mary Schapiro knows this and should be ashamed! This smells like an Obama move, once again, to save people from their own foolish actions and subsequent consequences!
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