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.

AP