Federal appeals court hears Stanford clawback claims

A federal appeals court in New Orleans questioned the receiver in the Stanford Financial Group case today. Senior Judge Will Garwood asked Ralph Janvey why he—and not the Securities and Exchange Commission—brought the suit, according to a Reuters report. “What gives you statutory authority to sue people the SEC did not?” Garwood asked Janvey. “It seems to me that the plaintiff or defendant ought to be the ones.” Janvey has attempted to sue those who he acknowledges are innocent investors for both their initial investment in the fraudulent Certificates of Deposit, but also any interest they received. A federal judge in Dallas ruled this summer that Janvey could recover only the interest—not the principal—on investments that prosecutors say fed a multibillion-dollar Ponzi scheme at the heart of Stanford. Janvey has said the clients named in his lawsuit unfairly cashed out and were paid with money stolen from other Stanford clients. Phil Preis, a Baton Rouge-based attorney representing Stanford investors in a class-action suit, says the SEC was “100% in support” of the arguments he made. “The proceeding went as well as it possibly could have and that we’re optimistic that the district court ruling will be upheld,” Preis says.