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Judge rejects SEC in suit for Stanford investors
A federal judge yesterday rejected a Securities and Exchange Commission lawsuit seeking relief for investors in R Allen Stanford’s US$7.2 billion Ponzi scheme. The SEC sued the Securities Investor Protection Corp in December, trying to force it to compensate investors who lost money in the scheme. SIPC runs an industry-funded reserve fund that protects customers of failed brokerage firms. It claimed the bank in Stanford’s scheme did not qualify. It was the first time the SEC sued SIPC.
US District Court Judge Robert Wilkins rule that the SEC failed to prove that the investors constitute victims under the narrow definition of the law, but he noted that the court is “truly sympathetic” to the plight of investors. Stanford was sentenced last month to 110 years in federal prison for orchestrating one of the largest Ponzi schemes in US history. Prosecutors say he used the money from investors who bought certificates of deposit from his bank on the Caribbean island nation of Antigua to fund a string of failed businesses, bribe regulators and pay for a lavish lifestyle.
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