Support SIPC in its SEC Case on Stanford

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Support SIPC in its SEC Case on Stanford
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.”

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.

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SIB was run by Sir Allen Stanford, Antiguan citizen, (until recently) resident, Knight, and largest private employer. SIB was domiciled, chartered, regulated and audited in Antigua, a country so corrupt that the book about it (freely available since published in the mid-80's) is called "Caribbean Time Bomb". Antigua's, "Minister of Justice" was Sir Allen personal lawyer, and since the scheme melted down, Antigua has expropriated investor's property, and taken over Sir Allen's profitable bank (Bank of Antigua) without compensation to the victims. In addition, Antigua has ignored it's extradition treaty with regard to Leroy King, unduobtably because Mr. King will implicate highers up (including two Antiguan Prime Ministers) in the fraud.

I fail to see what the US SEC or SIPC has to do with this.
Why wouldn't the brokerage industry want SIPC to protect investors who have their money stolen by SIPC member broker dealers, i.e. Allen Stanford. There were no CDs from a bank in Antigua. The owner of the broker dealer stole the money. That is why the SEC took "the Antiguan bank" into Receivership with the broker dealer in the U.S. The investments weren't just bad, they were never made. Allen Stanford is in jail for making the whole thing up to steal investor funds in a Ponzi scheme. Investors will never have confidence if SIPC doesn't protect them when the broker dealer steals their money instead of buying the securities they were sold. Congress and the securities industry should vehemently support SIPC paying the customers of a registered broker dealer who stole billions of dollars from its customers. That is what SIPC is for!
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.
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