SIPC's Opposition to Amicus filed by the Stanford Victims Coalition, Investors Committee and the...

7/29/2019 SIPC's Opposition to Amicus filed by the Stanford Victims Coalition, Investors Committee and the Examiner--Filed J

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ORAL ARGUMENT NOT YET SCHEDULED

12-5286

In the United States Court of Appealsfor the District of Columbia Circuit

SECURITIES AND EXCHANGE COMMISSION,

Appellant,

v.

SECURITIES INVESTOR PROTECTION CORPORATION,

Appellee.

On Appeal from the United States District Court

for the District of Columbia

(No. 11-678, Judge Robert L. Wilkins)

SECURITIES INVESTOR PROTECTION CORPORATIONS

OPPOSITION TO THE EXAMINER, OFFICIAL STANFORD INVESTORS

COMMITTEE, AND STANFORD VICTIMS COALITIONS MOTION FOR

LEAVE TO APPEAR AS AMICUS CURIAE, AND CROSS-MOTION, IN THE

ALTERNATIVE, TO STRIKE PORTIONS OF THE LODGED AMICUS BRIEF

Josephine Wang

General Counsel

SECURITIES INVESTOR

PROTECTION CORPORATION

805 Fifteenth Street, N.W.

Suite 800Washington, D.C. 20005

Michael W. McConnell

Eugene F. Assaf, P.C.

Edwin John U

John C. OQuinn

Elizabeth M. Locke

KIRKLAND & ELLIS LLP655 Fifteenth Street, N.W.

Washington, D.C. 20005

Counsel for Appellee Securities Investor

Protection Corporation

January 28, 2013

USCA Case #12-5286 Document #1417548 Filed: 01/28/2013 Page 1 of 23


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TABLE OF CONTENTS

Page

INTRODUCTION ..................................................................................................... 1BACKGROUND ....................................................................................................... 2ARGUMENT ............................................................................................................. 8CONCLUSION ........................................................................................................ 15



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TABLE OF AUTHORITIES

Page(s)

CasesAm. Dental Assn v. Shalala,

3 F.3d 445 (D.C. Cir. 1993) .................................................................................. 11

Am. Trucking Assns., Inc. v. City of Los Angeles,

559 F.3d 1046 (9th Cir. 2009) ..............................................................................10

*Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found.,

402 U.S. 313 (1971) .............................................................................................. 13

*Brookins v. United States,397 F.2d 261 (5th Cir. 1968) ..................................................................................9

*Christian Legal Soc. v. Martinez,

130 S. Ct. 2971 (2010) ................................................................................. 2, 9, 10

Eldred v. Reno,

239 F.3d 372 (D.C. Cir. 2001) ..............................................................................11

Estate of Parsons v. Palestinian Auth.,

651 F.3d 118 (D.C. Cir. 2011) ................................................................................ 9

*Goland v. Cent. Intelligence Agency,

607 F.2d 339 (D.C. Cir. 1978) ................................................................. 1, 8, 9, 10

Ill. Bell Tel. v. FCC,

911 F.2d 776 (D.C. Cir. 1990) ..............................................................................10

In re Brentwood Sec.,

925 F.2d 325 (9th Cir. 1991) ................................................................................ 14

In re New Times Sec. Servs., Inc.,

463 F.3d 125 (2d Cir. 2006) .................................................................................14

*Authorities upon which we chiefly rely are marked with asterisks.



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Keller v. Faecher,

44 F. Appx 828 (9th Cir. 2002) ............................................................................. 9

Lamprecht v. FCC,

958 F.2d 382 (D.C. Cir. 1992) ..............................................................................10

*Ministry of Def. of the Islamic Rep. of Iran v. Gould, Inc.,

969 F.2d 764 (9th Cir. 1992) ......................................................................... 10, 15

*Natl Anti-Hunger Coalition v.

Exec. Comm. of the Presidents Private Sector Survey on Cost Control,

711 F.2d 1071 (D.C. Cir. 1983) ....................................................................... 9, 10

*Natl Org. for Women, Inc. v. Scheidler,

223 F.3d 615 (7th Cir. 2000) ................................................................................ 15

Resident Council of Allen Parkway Village v. Dept. of Hous. & Urban Dev.,

980 F.2d 1043 (5th Cir. 1993) ..............................................................................11

Ryan v. Commodity Futures Trading Comn,

125 F.3d 1062 (7th Cir. 1997) ..............................................................................15

SIPC v. Barbour,

421 U.S. 412 (1975) ......................................................................................... 3, 11

Smith v. United States,

343 F.2d 539 (5th Cir. 1965) ......................................................................... 10, 15

*Unicore, Inc. v. Tenn. Valley Auth.,

768 F.2d 109 (6th Cir. 1985) ..................................................................................9

Vinson v. Wash. Gas Light Co.,

321 U.S. 489 (1944) .............................................................................................. 10

Wyatt v. Terhune,315 F.3d 1108 (9th Cir. 2003) ................................................................................ 9

Statutes and Rules15 U.S.C. 78aaa et seq. ...........................................................................................3

15 U.S.C. 78ccc(c)(1) .............................................................................................4



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15 U.S.C. 78ccc(c)(2) .............................................................................................4

15 U.S.C. 78fff ........................................................................................................ 3

15 U.S.C. 78ggg(b) .......................................................................................... 7, 11

Fed. R. Evid. 201(b) ...................................................................................................9

Other AuthoritiesC.J.S., Stipulations 93 (2000) .................................................................................2

Sept. 16, 2011 SEC Office of Inspector General,

Investigation of Conflict of Interest Arising from Former General Counsels

Participation in Madoff-Related Matters ...............................................................5



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GLOSSARY

Amicus Br. Jan. 18, 2013 Lodged Amicus Br. of the Court-

Appointed Examiner, the Official Stanford Investors

Committee, and the Stanford Victims Coalition, No.

12-5286 (D.C. Cir.)

CD Certificate of Deposit

Receivership Court The U.S. District Court for the Northern District of

Texas, Dallas Division

Feb. 9 Op. Feb. 9, 2012 Mem. Op., SEC v. SIPC, No. 1:11-mc-

00678-RLW [Dkt. 21] (D.D.C.)

SEC Securities and Exchange Commission

SEC App. Dec. 12, 2012 SEC App., SEC v. SIPC, No. 1:11-mc-

00678-RLW [Dkt. 1] (D.D.C.)

SGC Stanford Group Company

SIBL Stanford International Bank Ltd.

SIC Stanford Investors Committee

SIPA Securities Investor Protection Act

SIPC Securities Investor Protection Corporation

SVC Stanford Victims Coalition



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INTRODUCTION

This Court should deny the putative amicis motion for leave to file a brief

or alternatively, at a minimum, strike much of their proposed brief under the

straightforward principle that the record before an appellate court is limited to that

before the district court. Courts of appeals, after all, are meant to decide whether

the lower courts decision was correct based on the facts and record in the

proceedings below. As this Circuit and others have recognized, [a]n appellate

court has no fact-finding function in its own right, which means that it is neither

necessary nor appropriate for it to receive new evidence. Goland v. Cent.

Intelligence Agency, 607 F.2d 339, 371 (D.C. Cir. 1978) (per curiam).

The putative amicis proposed brief ignores this settled rule and seeks to

introduce alleged facts from otherproceedings in otherjurisdictions to which the

Securities Investor Protection Corporation (SIPC) was never a party, and then

use those supposed findings to alter the record that was actually before the

district court in this case. The amici themselves admit to this tactic, stating that

they seek to present supposed findings and rulings from a receivership

proceeding in Texas and the appeal from that proceeding that purportedly

contradict many of the facts upon which the district court apparently relied.

Jan. 18, 2006 Lodged Amicus Br. of Examiner, SIC & SVC, No. 12-5286, at 6

(D.C. Cir.) (Amicus Br.). Literally every page of the amicis proposed brief



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refers to findings that are not part of the record below and have no collateral

estoppel effect on SIPC. The amici even attempt to suggest how they would have

re-written the factual stipulations that SIPC and the Securities and Exchange

Commission (SEC)the actual litigants in this casereached and presented in

framing the issues for the district court. See Amicus Br. 12.

All of this underscores why the putative amicis motion for leave should be

rejected. Simply put, an amicus brief is not a proper vehicle for introducing

supposed evidence beyond the record, especially when the Supreme Court itself

has recognized that factual stipulations are binding and conclusive and that not

even parties may properly suggest, on appeal, that the facts were other than as

stipulated or that any material fact was omitted. Christian Legal Soc. v. Martinez,

130 S. Ct. 2971, 2983 (2010) (quoting C.J.S., Stipulations 93 (2000)). Since the

putative amici do nothing more, this Court should deny their motion for leave to

appear, or alternatively, at the very least, strike those aspects of their proposed

brief that go beyond the record in this case.

BACKGROUND

This appeal stems from the SECs efforts to compel SIPC to initiate a

liquidation proceeding for purchasers of offshore bank CDs that were not (nor

were they supposed to be) in the custody of a SIPC-member brokerage firm.

Instead, the CDs were issued by, and purchased from, an Antiguan bank (Stanford



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International Bank Ltd., or SIBL)and were delivered to the purchasers or their

designees, not held by a SIPC-member brokerage.

SIPC is a non-profit membership corporation created in 1970 by the

Securities Investor Protection Act (SIPA), 15 U.S.C. 78aaa et seq., for the

purpose, inter alia, of providing financial relief to the customers of failing broker-

dealers with whom they had left cash or securities on deposit. SIPC v. Barbour,

421 U.S. 412, 413 (1975). To fulfill this function, the statute authorizes SIPC to

impose assessments on SIPC-member brokerage firms in order to administer the

liquidation of failing members and compensate qualified customers if cash or

securities in the custody of those members goes missing (subject to various

limitations prescribed by statute). See, e.g.,15 U.S.C. 78fff, 78fff-3(a).

In recent years, SIPC has initiated the liquidations of Lehman Brothers, Inc.,

Bernard L. Madoff Investment Securities LLC, MF Global, Inc. and other member

brokerage firms within one to three daysand, in the case of MF Global, within

hours once SIPC determined that there were customers in need of protection

under SIPA. In its more than 300 liquidation proceedings, this is the first time that

SIPC has concluded that the statute did not authorize a liquidation requested by the

SEC. SIPC is governed by a seven-member Board of Directors, five of whom are

appointed by the President of the United States and confirmed by the Senate, one

of whom is a designated representative from the Department of the Treasury, and



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one of whom is a designated representative from the Federal Reserve Board. Id.

78ccc(c)(1), (2).

In early 2009, the SEC filed an enforcement action in the United States

District Court for the Northern District of Texas against SIBL and Stanford Group

Company (SGC), among others, in connection with the widely publicized Allen

Stanford fraud. At the SECs request, that court also appointed a receiver to

oversee the assets of the defendants (and hence the putative amici refer to the

Northern District of Texas as the Receivership Court).

Because SGC was a SIPC-member brokerage firm, the SECs receiver asked

SIPC whether SGC clients who had made investments in SIBLs Antiguan CDs

would be entitled to protection under SIPA. See Feb. 9, 2012 Mem. Op., SEC v.

SIPC, No. 1:11-mc-00678-RLW [Dkt. 21], at 2-3 (D.D.C.) (Feb. 9 Op.). SIPC

responded shortly thereafter, explaining that SIPA did not apply because the statute

only protects those who have left cash or securities in the custody of a failing

SIPC-member brokerage firm, i.e., SGCwhereas this case concerned the

purchase of offshore bank CDs that were not in the custody of SGC or any other

SIPC-member brokerage. See id. at 3.



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The SEC never objected to this conclusion at the time (to the contrary, its

then-General Counsel concluded that SIPA did not apply to the Stanford case).1

Nearly two years later, howeverand only after a United States Senator threatened

to hold up the confirmation of two nominees for SEC Commissioner in light of

these issuesthe SEC suddenly reversed course, issuing a short memorandum that

argued that investors in SIBL CDs should receive SIPA protection. See Feb. 9 Op.

3. Later that year, the SEC filed suit in the U.S. District Court for the District of

Columbia, in what it described as an Application for an order to compel SIPC to

initiate a liquidation proceeding of SGC. The SEC contended that its

memorandum constituted a judicially unreviewable determination that the district

court should enforce with no discovery and no judicial review. See Dec. 12, 2012

SEC App., SEC v. SIPC, No. 1:11-mc-00678-RLW [Dkt. 1] (D.D.C.) (SEC

App.); see also SEC Mem. in Supp. of App., SEC v. SIPC, No. 1:11-mc-00678-

RLW [Dkt. 1], at 12, 30 (D.D.C.) (arguing that the SECs preliminary

determination is not subject to judicial review, and that the regular rules of

civil procedure do not apply).

1

See Sept. 16, 2011 SEC Office of Inspector General,Investigation of Conflict ofInterest Arising from Former General Counsels Participation in Madoff-Related

Matters at 112, available athttp://www.sec.gov/foia/docs/oig-560.pdf (noting that

[t]he Commission began considering the legal question of SIPA coverage for

Stanford investors but its General Counsel concluded that SIPA, the statute, did

not cover the Stanford situation), attached as Ex. 4 to SIPC Oppn, SEC v. SIPC,

No. 1:11-mc-00678-RLW [Dkt. 23] (D.D.C.).



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At the district courts request, the SEC and SIPC discussed whether they

could stipulate to certain facts in order to narrow the range of issues in dispute,

including what, if any, discovery should be afforded. The parties agreed that

certain facts were undisputed and accordingly stipulated, among other things, that:

SIBL offered certificates of deposit [] to investors. In order topurchase a SIBL CD, an investor had to open an account with

SIBL. CD investors wrote checks that were deposited into SIBL

accounts and/or filled out or authorized wire transfer requests

asking that money be wired to SIBL for the purpose of opening

their accounts at SIBL and purchasing CDs.

Most SGC investors either received the physical CD certificatesor had them held by an authorized designee, including Stanford

Trust Company. To the extent that some SIBL CD investors did

not receive the physical certificates, the SEC is not relying on that

fact to support its claims in this proceeding.

In the United States, disclosure statements for SIBLs CDs statedthat SIBLs products are not subject to the reporting requirements

of any jurisdiction, nor are they covered by the investor protection

or securities insurance laws of any jurisdiction such as the U.S.Securities Investor Protection Insurance Corporation.

Mar. 5, 2012 Stipulated Facts, SEC v. SIPC, No. 1:11-mc-00678-RLW [Dkt. 30-1],

3-4, 6 (D.D.C.); see also Mar. 8, 2012 Stipulated Facts, SEC v. SIPC, No. 1:11-

mc-00678-RLW [Dkt. 31-1] (D.D.C.).

On July 3, 2012, the district court issued a Memorandum Opinion and Order

denying the SECs Application. See July 3, 2012 Mem. Op., SEC v. SIPC, No.

1:11-mc-00678-RLW [Dkt. 34] (D.D.C.). After extensive briefing and argument,

the Court concluded that whether analyzed under the SECs asserted probable



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cause standard or under a traditional preponderance of the evidence standard, the

SEC did not and could not meet its burden of proving that SIPC has refus[ed]

. . . to commit its funds or otherwise to act for the protection of customers of any

member of SIPC, as would be required to compel SIPC to open a liquidation

proceeding under Section 11(a) of SIPA. Id. at 18 (citing 15 U.S.C. 78ggg(b)).

The SEC has appealed.

The Stanford Victims Coalition (SVC), the Stanford Investors Committee

(SIC), and an examiner appointed by the Northern District of Texas in the SECs

enforcement proceeding have moved to file a joint amicus brief in this Court.

Notably, the SVC, an organization that purports to represent investors in SIBL

CDs, provided extensive submissions to the SEC even before the SEC filed its suit

in the district court. See SEC App. 11; see also Jan. 18, 2012 Mot. for Leave to

Appear as Amicus, No. 12-5386, at 7 (D.C. Cir.); May 19, 2010 Letter from SEC

to SVC Counsel, attached as Ex. 23 to SIPC Oppn, SEC v. SIPC, No. 1:11-mc-

00678-RLW [Dkt. 23] (D.D.C.). Similarly, SIC and the examiner were in

consultation with the SEC leading up to the SECs filing of its Section 11(b)

Application and during the pendency of the litigation in the district court. As the

examiner reported to the court overseeing the receivership, he communicate[d]

regularly with the SEC, and served as a liaison between [SIC] and the SEC with

respect to whether Stanford victims should be afforded coverage by the



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Securities Investor Protection Corporation. June 29, 2011 Mot. for Approval of

Seventh Int. App. for Payment of Fees, SEC v. Stanford Intl Bank, Ltd., No. 09-

cv-00298 [Dkt. 1386], at 7, 15 (N.D. Tex.); see also Mar. 12, 2012 Mot. for

Approval of Ninth Int. App. for Payment of Fees, SEC v. Stanford Intl Bank, Ltd.,

No. 09-cv-00298 [Dkt. 1542], at 16-17 (N.D. Tex.) (examiner and SIC provide[d]

information supportive of the SECs decision directing SIPC to commence a SIPA

proceeding to the SEC). Indeed, the examiner reviewed the various court filings

made by the SEC and SIPA [i.e., SIPC] in this case and conferred with members

of [SIC] during the pendency of the district court litigation. June 26, 2012 Mot.

for Approval of Tenth Int. App. for Payment of Fees, SEC v. Stanford Intl Bank,

Ltd., No. 09-cv-00298 [Dkt. 1632], at 18 (N.D. Tex.).

Having worked hand-in-glove with the SEC to shape the record starting even

before the SEC filed suit, and having waited to see what the outcome of the

litigation would be, these putative amici now seek to introduce information beyond

the record, in a proposed brief that expressly seeks to contradict many of the

facts before the district court. Amicus Br. 6, 12.

ARGUMENT

The putative amicis motion for leave should be denied given the bedrock

principle that courts of appeals are limited to the record developed in the district

court. Goland, 607 F.2d at 370; see alsoNatl Anti-Hunger Coalition v. Exec.



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Comm. of the Presidents Private Sector Survey on Cost Control, 711 F.2d 1071,

1075 (D.C. Cir. 1983) (As we have previously recognized, [a]ppellate review is

ordinarily unaffected by matters not contained in the record. (quoting Goland,

607 F.2d at 370)).2

[F]acts not in the record may not be relied upon in this court,

and a party who admits or stipulates facts is bound by that concession on appeal.

Estate of Parsons v. Palestinian Auth., 651 F.3d 118, 144 (D.C. Cir. 2011) (Brown,

J., concurring and dissenting in part); see alsoChristian Legal Soc., 130 S. Ct. at

2983; Unicore, Inc. v. Tenn. Valley Auth., 768 F.2d 109, 112 (6th Cir. 1985)

(where parties stipulate to facts, the District Judge was bound and [the court of

appeals] [is] bound by the record); Brookins v. United States, 397 F.2d 261, 262

(5th Cir. 1968) (This appellate court can only take the record as it finds it, and

cannot add thereto, or go behind, beyond, or outside it.). This Court sits to

review the district courts decision on the record before the district court, not a

mishmash derived from different actions involving different legal issues and

2Courts of appeals will sometimes consider new evidence that is properly subject

to judicial notice or when necessary to resolve jurisdictional questions. See, e.g.,

Goland, 607 F.2d at 370 n.7. Those narrow exceptions, however, are irrelevant

here and in no way analogous to the putative amicis request that this Court

consider findings from a different court in a different dispute between different

parties. Nor can these supposed findings be the subject of judicial notice. SeeWyatt v. Terhune, 315 F.3d 1108, 1114 n.5 (9th Cir. 2003) (Factual findings in

one case ordinarily are not admissible for their truth in another case through

judicial notice. [A] court may not take judicial notice of findings of fact from a

different case for their truth.); see also Keller v. Faecher, 44 F. Appx 828, 832

(9th Cir. 2002) (unpub) ([A] court may not take judicial notice of a fact that is

subject to reasonable dispute. (quoting Fed. R. Evid. 201(b))).



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different parties. SeeChristian Legal Soc., 130 S. Ct. at 2983; Goland, 607 F.2d at

370-71;Natl Anti-Hunger Coalition, 711 F.2d at 1075.

In light of this limitation, neither a party nor an amicus may seek to present

new alleged facts on appeal, much less to contradict the facts to which the parties

actually stipulated. To the contrary, courts of appeals commonly reject attempts to

do so. See, e.g.,Am. Trucking Assns., Inc. v. City of Los Angeles, 559 F.3d 1046,

1053 n.11 (9th Cir. 2009) (We decline to consider the amicus brief , which

seeks to raise issues not raised or briefed by the parties, and order it stricken.)

(citation omitted); Ministry of Def. of the Islamic Rep. of Iran v. Gould, Inc., 969

F.2d 764, 773 (9th Cir. 1992) (We decline to go outside the record to consider

new facts submitted by a non-party [in an amicus brief] at this stage of these

proceedings.); Smith v. United States, 343 F.2d 539, 541 (5th Cir. 1965) (The

Court must decline to consider the merits of issues based on new evidence

furnished for the first time on appeal in the form of affidavits presented by the

amicus.). Just as intervenorswho are actually parties to a proceeding, unlike

amicimay join issue only on a matter that has been brought before the court by

another party, Ill. Bell Tel. v. FCC, 911 F.2d 776, 786 (D.C. Cir. 1990), and

cannot expand the proceedings,Lamprecht v. FCC, 958 F.2d 382, 389 (D.C. Cir.

1992), so too with amici. See also Vinson v. Wash. Gas Light Co., 321 U.S. 489,

498 (1944) ([A]n intervenor is admitted to the proceedings as it stands, and in



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respect of the pending issues, but is not permitted to enlarge those issues or compel

an alteration of the nature of the proceeding.).3

That principle applies with even greater force in this case, in which the SEC

sued SIPC under Section 11(b) of SIPA, 15 U.S.C. 78ggg(b). As the Supreme

Court held in SIPC v. Barbour, 421 U.S. 412, 425 (1975), Section 11(b) authorizes

the SECand the SEC aloneto challenge SIPCs determination, and does not

authorize participation by individual investors given the proliferation of competing

and conflicting arguments and allegations that would result. The putative amicis

proposed brief threatens exactly the type of disarray that Congress intended to

avoid when it chose to channel such suits exclusively through the SEC.

These straightforward principles doom the putative amicis motion. Their

brief admits on its face that they seek to present findings and rulings from the

Texas receivership that supposedly contradict many of the facts upon which the

district court apparently relied, Amicus Br. 6even though SIPC was never a

party to those proceedings and thus any alleged findings in those proceedings

3Similarly, courts of appeals routinely reject attempts by amici to raise new issues

not advanced below. See, e.g.,Eldred v. Reno, 239 F.3d 372, 378 (D.C. Cir. 2001)

(argument by amicus was rejected by the actual parties to this case and therefore

is not properly before us);Am. Dental Assn v. Shalala, 3 F.3d 445, 448 (D.C. Cir.1993) (We likewise do not address the separate contentions raised by amicus

curiae because they are beyond the scope of the issues raised below by the

appellants.); Resident Council of Allen Parkway Village v. Dept. of Hous. &

Urban Dev., 980 F.2d 1043, 1049 (5th Cir. 1993) ([A]n amicus curiae generally

cannot expand the scope of an appeal to implicate issues that have not been

presented by the parties to the appeal.).



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would have no collateral estoppel effect. Indeed, the brief makes repeated

reference to those findings and rulings as if they were binding (or even relevant),

despite the fact that the amici do not and cannot argue that they are part of the

record in this proceeding, much less that they could possibly have preclusive effect

against SIPC here. See, e.g., id. at 7 ([T]he Receivership Court and the 5th

Circuit have made findings and rulings that largely contradict the facts upon

which the district court relied.); id. at 12 (The district courts treatment of SGC

and SIBL as distinct, separate entities is contradicted by the findings of the

Receivership Court and the 5th Circuit.). Literally every part of the amicis

brief is infected with references to information that goes beyond the record before

the district court. The amici even go so far as to argue how they would have re-

written the parties stipulations. See id. at 12. And even those sections of the brief

that purport to advance legal argumentsthe discussion of the Old Naples and

Primeline cases, for exampledo so by using the facts purportedly found in the

Receivership Court rather than those that the SEC and SIPC recognized to be

relevant to this case and placed in their factual stipulations to the district court.

See, e.g., id. at 20 (The findings of the Receivership Court and the 5th Circuit

establish a number of other parallels [with Old Naples and Primeline]).

Not only do the putative amici rely on evidence outside the district courts

record, they even rely on matters decided after the decision below. Although the



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district court dismissed the SECs Application on July 3, 2012, one of the primary

rulings on which the putative amici rely, and which they attach to their lodged

brief, was issued in the receivership proceeding weeks later on July 30, 2012. See

id. at 6 (citing July 30, 2012 Order, In re Stanford Intl Bank, Ltd., No. 3:09-CV-

0721-N [Dkt. 176] (N.D. Tex.)).

None of this provides proper grounds for the putative amicis submission.

The findings that they demand to present involve different proceedings among

different parties in different courtsnone of which even raised, much less reached,

the question in this case of whether SIPC should be compelled to initiate a

liquidation to protect those who invested in offshore bank CDs that were not in the

custody of a SIPC-member brokerage firm. Whatever disagreement the amici may

have with how the SEC chose to frame its case in the district court here, none of

that would support expanding this appeal to encompass matters beyond the district

court recordespecially when (1) the SEC was fully aware of the amicis alleged

facts from their coordination and communication starting even before the SEC

filed suit, see supra at 7-8, and (2) the amici seek to introduce supposed findings

from other proceedings to which SIPC was never a party and that therefore have no

preclusive effect. See Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S.

313, 330 (1971) (Some litigantsthose who never appeared in a prior action

may not be collaterally estopped without litigating the issue. They have never had



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a chance to present their evidence and arguments on the claim. Due process

prohibits estopping them despite one or more existing adjudications of the identical

issue which stand squarely against their position.). Indeed, the SEC began

receiving information from the amici as early as the spring 2010 (if not well

before), and continued to do so before and after eventually filing suit in December

2012. What this shows is that the SEC had the information available to it, and the

amicis disagreement with how the SEC presented its case does not permit them to

ignore the record that was before the district court.

Even taken on their own terms, it would be particularly remarkable to rely

on findings from proceedings to which SIPC was never a party, to conclude that

a foreign bank in Antigua was really one and the same as a U.S. broker-dealer

for purposes of SIPA. This is especially true given that SIBL is unquestionably not

a SIPC member, and that, as the amici admit, investors intended to purchase

these offshore SIBL CDs. Amicus Br. 15 (emphasis added). Likewise, the amicis

recitation of findings that Allen Stanford operated a fraudulent enterprise, id.

at 13, would not affect the analysis of whether SIPA applied, because it is well-

established that the statute does not protect against fraud. See, e.g., In re New

Times Sec. Servs., Inc., 463 F.3d 125, 130 (2d Cir. 2006) (SIPA does not protect

against all cases of alleged dishonesty and fraud.); In re Brentwood Sec., 925 F.2d

325, 330 (9th Cir. 1991) (SIPA protects investors when a broker holding their



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assets becomes insolvent. It does not comprehensively protect investors from the

risk that some deals will go bad or that some securities issuers will behave

dishonestly.).

Against this backdrop, the amicis proposed brief fails to offer any

permissible perspective, or information, that can assist the court of appeals

beyond what the parties are able to do. Natl Org. for Women, Inc. v. Scheidler,

223 F.3d 615, 617 (7th Cir. 2000); see alsoMinistry of Def. of the Islamic Rep. of

Iran, 969 F.2d at 773; Smith, 343 F.2d at 541; cf. Ryan v. Commodity Futures

Trading Comn, 125 F.3d 1062, 1063 (7th Cir. 1997) (opinion of Posner, J.) (We

are not helped by an amicus curiaes expression of a strongly held view about the

weight of the evidence, but by being pointed to considerations germane to our

decision of the appeal.). Whether to permit a nonparty to submit a brief, as

amicus curiae, is, with immaterial exceptions, a matter of judicial grace. Natl

Org. for Women, Inc., 223 F.3d at 616. The amici cannot meet that standard based

on a brief that rests entirely on matters beyond the record.

CONCLUSION

For the foregoing reasons, this Court should deny the putative amicis

motion for leave, or alternatively strike the portions of their proposed brief that go

beyond the record in this proceeding.



22/23

16

Dated: January 28, 2013 Respectfully submitted,

s/Michael W. McConnell

Michael W. McConnellEugene F. Assaf, P.C.

Edwin John U

John C. OQuinn

Elizabeth M. Locke

KIRKLAND & ELLIS LLP

655 Fifteenth Street, N.W., Suite 1200

Washington, DC 20005

Tel: (202) 879-5000

Fax: (202) [email protected]

[email protected]

[email protected]

[email protected]

[email protected]

Josephine Wang

General Counsel

SECURITIES INVESTOR

PROTECTION CORPORATION

805 Fifteenth Street, N.W., Suite 800


Tel: (202) 371-8300

Fax: (202) 371-6728

[email protected]

Attorneys for Securities Investor

Protection Corporation



23/23

CERTIFICATE OF SERVICE

I hereby certify that on the 28th day of January, 2013, I served the foregoing

briefas follows:

1. By ECF on the following:

Michael Post

Securities and Exchange Commission

100 F Street NE

Washington, DC 20549

(202) 551-4481

[email protected]

John HeffnerStrasburger & Price, LLP

1700 K Street N.W., Suite 640


(202) 742-8600

[email protected]

Robertson Park

Murphy & McGonigle, P.C.

555 13th Street, N.W., Suite 410

Washington, D.C. 20004(202) 661-7022

[email protected]

/s/ Eugene F. Assaf

Eugene F. Assaf, P.C.

KIRKLAND & ELLIS LLP

655 Fifteenth Street, N.W.


Telephone: (202) 879-5000

Facsimile: (202) 879-5200

[email protected]

Counsel for Appellee Securities

Investor Protection Corporation


SIPC's Opposition to Amicus filed by the Stanford Victims Coalition, Investors Committee and the...

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Transcript of SIPC's Opposition to Amicus filed by the Stanford Victims Coalition, Investors Committee and the...