Stanford investors await decision on compensation

The Securities and Exchange Commission is pushing for investors who were allegedly defrauded by the Stanford Financial Group to get some of their money back. Last week, the SEC said the Securities Investor Protection Corporation should cover investors who lost money when they bought certificates of deposit from Allen Stanford. SIPC normally covers customers when a broker becomes insolvent, and normally doesn’t cover loss due to fraud. But The New York Times says the SEC ruled that Stanford stole from customers by selling worthless CDs and that any calculation of claims should be based on what people invested, not on the value of the CDs. In any event, efforts to recover some of the $7 billion that Stanford allegedly defrauded from investors may be difficult. People who took more out of Stanford than they invested could be subject to clawback suits to repay their profits. Those clawbacks have been an issue in the case of investors defrauded by Bernie Madoff. “We can expect more of the same if SIPC liquidates Mr. Stanford’s brokerage firm,” says The Times. Read the full story here.