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tfartgrEEIs af f(E SnuetI SfateEIBkrsgtttgtan,
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Sincerely,
Rep. Bill Cassidy Sen. David Vitter
R ep, harles W. ou y , J r . S en. Mar La r i e u
Rep, Charlie l a n co n en. Thad Cochran
Rep. Steve Scalise Sen. R g W i ck er
Rep. Ahn "Joseph' Cao en, Johnny sakson
Rep. Rodk ey Ale ander Sen. Mark Pxyor
p. John Fleming Sen. Blanche Lincoln
Rep. Gr Ha r per . Richard Burr
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p. Gene Taylo Sen. Robert P. Casey, Jr.
ep, Bennie homps Sen. Jeanne Shaheen
t&islQ
Rep. Travis Childers Rep. Lamar Smith
Rep, Ciro Rodriguez R p. John Boozman
Rep. Robert sexier Rep. Ileana Ros-Lehtinen
Rep. Ron Klein Rep. Al'cee Hastings
Rep. R B l un t Re Al lyso . S ch wartz
Rep. Tim Murphy ep. Sue Myrick
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Rep. Bill Delahunt Rep l i jah Cummings
(e-oa)5
Rep. Tom Cole Rep. Mike Rogers
Re ohn Ha11 Rep. Joe Wilson
aine Luetkeme r Re . Kenny Marchant
ep, Phil Ingre ep. Harold Rogers
R . Li ncoln i az -Balart Rep, M io Diaz- alart
Sen. Kit Bond Rep. Rush Holt
e . om Rooney Rep. Brad Miller
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Rep. Pete Sessions
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Cnttgtcss' nf ttjt Rttittb Statt5Biles'Ijittgton, QC 20510
November 25, 2009
The Honorable Mary L. SchapiroChairmanU.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Dear Chairman Schapiro;
We are writing to request that the SEC conduct a formal review of the Securities Investor
Protection Corporation's (SIPC) decision that the Securities Investor Protection Act (SIPA)
could not be used to initiate a liquidation of Stanford Group Company (SGC) to satisfy the
claims of victims of the alleged Ponzi scheme carried out by Allen Stanford and the Stanford
group of companies.
The SEC filed a civil complaint against Allen Stanford and the Stanford group companies on
February 16, 2009. The report completed by the court-appointed receiver for all Stanford assetsrevealed an extraordinarily complex fraudulent scheme meant to steal investor funds for Allen
Stanford's personal use and for the benefit of the Stanford companies. This alleged Ponzi
scheme is one of the most substantial financial crimes ever carried out in the U.S,
It is our understanding that SIPC coverage, a system in place to protect investors when funds are
stolen by a broker-dealer, has been denied to investors with SGC who purchased fraudulent
Stanford International Bank Certificates of Deposit. We also understand that the SEC has
plenary authority over SIPC and we request that the SEC seriously review the denial of SIPC
coverage and at the appropriate time respond in detail to the legal arguments recently presented
to the SEC by the Stanford Victims Coalition in the attached letter, dated November 12, 2009.
We look forward to your response and thank you for recently meeting with the Stanford Victims
Coalition and to working cooperatively to uncover the facts of this fraud that has devastated thelives of thousands of Americans and severely shaken investor confidence.
Sincerely,
Lamar Alexander Bob Corker
United States Senator United States Senator
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Marsha Blackburn eve ohen
Member of Congress ember of Congress
John TannerMember of Congress
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CortgEIEI of ffr 'frfTIfffI SfafEI'Nasgrngiarr,
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In accordance with existing laws and regulations, we urge the SEC to heed the OIG report inmaking its final deter mination regarding the payment of SIPC claims to vict ims of the SGC Ponzi
scheme, and seek the SEC's urgent and full cooperation to ensure justice for those who have been
wronged by this crime.
We thank you in advance for your cooperation and look forward to your quick response.
Sincerely,
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~ C
/r/.
re
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1. Senator Roger Wicker2. Senator Mark Pryor3. Senator Thad Cochran
4, Senator Blanche Lincoln5, Senator David Vitter6. Senator Richard Burr7, Senator Mary Landrieu8. Rep. Sue Myrick9. Rep. Allyson Y, Schwartz10. Rep. Kay Granger11. Rep. Charlie Melancon12. Rep. Bill Cassidy13. Rep. Michael McCaul14. Rep. Gregg Harper15. Rep. Charles W. Boustany, jr.
16. Rep. Gabrielle Giffords17. Rep. Gene Taylor18. Rep. Lamar Smith
19. Rep. Ileana Ros-Lehtinen
20. Rep. Pete Sessions21. Rep. Lynn C. Woolsey22. Rep. Travis W. Childers23. Rep. Brad Milier24. Rep. Blaine Luetkemeyer
25, Rep. Steve Cohen
26, Rep, Ron Paul27. Rep. Al Green
28. Rep. Kenny Marchant29. Rep. Patrick McHenry
30. Rep. Marsha Blackburn31. Rep. Rodney Alexander32. Rep. Ron Klein
33. Rep. Steve Scalise34. Rep. Anh "joseph" Cao35. Rep. Lincoln Diaz-Balart
36. Rep. Chet Edwards37. Rep. Melvin L. Watt
38. Rep. Bennie Thompson
39. Rep. Silvestre Reyes
40, Rep. Tim Murphy41. Rep. Ciro D. Rodriguez
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CLAIRE McCASKILLMISSOURI
1Roitol 5tste @mat~WASHINGTON, DC 20510
May 12, 2010
The Honorable Mary ShapiroChairmanSecurities and Exchange Commission
100 F Street, NEWashington, DC 20549
Dear Chairman Shapiro:
I have been informed that the Securities and Exchange Commission (SEC) is currently reviewing whethervictims of the alleged $7.2 billion ponzi scheme perpetrated by Stanford Financial Group are entitled tocoverage from the Securities Investor Protection Corporation (SIPC). I would urge you to conduct a
careful review and provide all due consideration to the victims who have lost a vast amount of wealth as aresult of the fraud.
While relatively few of the victims of the Stanford ponzi scheme reside in Missouri, those that do havesuffered immensely. Some have lost all of their retirement savings while on the brink of retirement.
Others are now all but destitute.
I understand that this case is particularly difficul t because of Stanford's complicated corporate structure
and the transnational nature of their transactions. I also think it is important to bear in mind that it wasStanford, and not the SEC, that is alleged to have stolen the victims' money. However, the reports by theSEC's Inspector, General on both the Madoff and Stanford ponzi schemes, as well other scandals, haveshaken investors' confidence in the commission.
I know that you are working hard to rebuild the SEC's reputation. One effort that can help is to makesure that victims of Stanford and all other ponzi schemes are treated as fairly and judiciously as possible.
The SEC must do everything in its power to combat any perception that one group of victims is receivingdifferent consideration than another.
Please keep me updated of any developments in the Stanford case.
Sincerely,
CLAIRE MCCASKILL
United States Senator
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June 14, 2010
Chairman Mary Schapiro
Securities and Exchange Commission
100 F Street NEWashington, D.C. 20549
Dear Chairman Schapiro,
I have been talking with my colleague Vic Snyder, who represents many other Members, who
have signed a letter to you urging that victims of the fraud perpetrated by the Stanford Financial
Group Ponzi scheme be given access to the SIPC, We are talking clearly here about innocentvictims, and I agree that everything should be done within the law to extend protection to them.
I know that you share our conviction that innocent people should be given the fullest benefits of
a court interpretation of the law, and I write in support of the request you received. I believe thatthe officers make a substantial case for separate coverage, although 1' realize that the final
decision will rest with you and the lawyers who advise you,
BARNEY FRANK
BF/la
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Kottgnss of tflt Sttittb States58n5fjittgtott, SC 20510
March 16, 2011
The Honorable Mary L. Schapiro
Chairman
Securities and Exchange Commission100 F Street, NE
Washington, D.C. 20549-0001
Dear Chairman Schapiro,
It has been more than two years since thousands of Americans lost their savings in theStanford Ponzi scheme. For many of the victims, these losses reflect most, if not all, of theirretirement funds that were accumulated over many years of hard work. These Americans relied
on the Securities Exchange Commission (SEC) to uphold its federal mandate to protect investors
and the SEC failed in this regard.
For twelve years, the SEC failed to seriously investigate the Stanford Ponzi scheme,
which grew from approximately $500 million in investments in 1997 to $7.2 billion in 2009, In
2010, SEC Inspector General David Kotz revealed the SEC was aware as early as 1997 thatStanford investors' funds were in jeopardy of being stolen. It was not until 2004 seven years
after the SEC first became aware of problems at Stanford that an official investigation was
opened. By the time the SEC took action in this case, it was too late for the Stanford victims.Stanford investors lost virtually everything,
While we understand there are numerous complexities involved in the Stanford case, thebottom line is that investors' funds are tnissing and the SEC failed to act in a timely manner to
put an end to Allen Stanford's fraud. In addition, we understand that many Stanford investors
were customers of Stanford Group Company (SGC), a broker-dealer that was a member of
Securities Investor Protection Corporation (SIPC). We are also keenly aware of ongoing SEC
efforts to determine whether Stanford Victi tns qualify for coverage under the Securities InvestorsProtection Act ("SIPC coverage"). As you continue to review and reconstruct the fraud of the
Stanford Ponzi scheme, we urge you to prioritize the determination of whether Stanford Victims
qualify for SIPC coverage.
We are aware of several issues the SEC staff has raised with respect to whether StanfordVictims qualify for SIPC coverage. It is our understanding that SEC counsel has informallystated that SGC customers are not eligible for SIPC coverage at this time because (1) SGC was
merely an introducing broker-dealer, and (2) SIPC is not meant to compensate customers of
worthless securities. Before making a formal decision, we request the SEC consider the facts set
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forth in the Declaration of Karyl Van Tassel (attached hereto as "Exhibit A"), which illustrates
how the funds for SGC were generally routed to continue Stanford's fraudulent businesspractices, rather than purchasing securities.
We are concerned that the SEC's ongoing review of Stanford Victims'eligibi lity for SIPC
coverage reflects a lack of urgency. We trust you will expedite your review of this issue and
keep us informed of your findings.
Sincerely yours,
Ro r . W i cker ry L. andric
U.S. n a tor .S. Se tor
Thad Cochr Robert P. Casey
U.S. Senator U.S. Senator
Richard Burr Mark Pryor
U.S. Senator U,S. Senator
Bob Corker Jo n lb e rson
U.S. Senator U, . e presentative
Lamar S. Smith John J uncan Jr.U.S. Representative U.S. R resentative
eana Ros-Lehtin Ron Paul
U.S. Representative U.S. Representative
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David E. Price Lynn . Woolsey
U.S. Representative U,S. Representative
Bennie G. Thompson Lloyd DoggettU.S. Representative U.S. Representative
Sue Myrick Kevin Brady
U.S. Representative U.S. Representative
Kay a nger ete Sessions
U.S. epresentative U.S. Representative
helley Berkley ik RossU.S. Representative U.S. Representative
Rodney . A lexander M ar a W. Bl c u r n
U.S. Repr sentative U.S. Representative
7
Bonner Michae C. Burgess g . t .
U.S. Representative U.S. Representative
Brad Miller n R. Carter
U.S. Representative U.S. Representatives
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c 7,les W. Boustan Michael McCaul
U.S. Representative U.S. Representative
nny Marchant Mike Con way
U.S. Representative U.S. Representative
' llyson . Schwartz Vern Bucha n
U.S. Representative U.S. Representative
Kathy Cas r Steve ScaliseU,S. Representative U.S. Representative
Bill,assidy J FlemingU.S. Representative U. . Representative
Gregg cr u ey
U.S. Representative U.S. Rep entati e
Pete G. Olson T Rooney
U.S. Representative U.S. Representative
Ted Deutch ico Cans oU.S. Representative U.S. Representative
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Bill Flores Tim Griffin
U.S Repre ntative U.S Representative
Lan
resentative Alan Nunnelee
U.S. Representativ
Steven Palazzo Cedric Richmond
U.S. Representative U.S. Representative
Allen B. West
U.S. Representative U.S. Senator
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Exhibit A
IN THE UNITED STATES DISTRICI' COURTPOR THE NORTHERN DISTRICT OP THUS
DALLAS DIVISION
5SECUIUTIES AND EXCHANGECOMMISSION, 5
Plaintiff,V. 5
5STANFORD INTERNATIONAL BANK, 5 Case No, 3-o9-CV-o298-NLTD, et czE., 5
gDefendants.
5
5
DECLARATION OFIGQKYL VAN TASSEL
I, Karyl Van Tassel of ioox Fanniu, Suite i4oo', Houston, TX ~oo2 state onoath as follows:
I am a Certified Public Accountant in the State of Texas and a SeniorManaging Director of FTI Consulting, Inc.
The statements made in this declaration are true and, correct basedoa the knowledge I have gained. from the many documents I have reviewed. andother work I and my team have performed in the course of PTI's investigation onbehalf of the Receiver.
3. On February 16, 2oo9, the United States District Court for the
Northern District of Texas appointed Ralph S. Janvey the Receiver for all legalentities owned, directly or indirectly, by the named defeadants (" StanfordEntities" ) in the U.S. Securities ind Exchange Commission ("SEC") action as of thedate the Receivership was instituted. On the same day, the Receiver retained, PTIto perform a variety of services, including assisting in the capture and safeguardingof electronic accounting and other records of the Stanford Entities and forensicaccounting analyses of those records, including cash tracing. I oversee, and am
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personally involved in, FTI's forensic accounting and cash tracing activities for the
Stanford Entit ies. The purposes of FITs work have been, in part, to (a) determine
the roles the various Stanford Entities played in the fraud. alleged by the SEC and
specificaliy in the sale and redemption of Stanford International Bank ("SIB")certificates of deposit ("CDs"); (b) identify the source(s) of income and cash flowsfor the various Stanford Entit ies; and (c) trace those funds to determine how they
were allocated and disbursed throughout the Stanford Entit ies.
4. Thi sdeclaration is being made in connection with the Stanford
Victims Coalition's ("SVC") request to the SEC to direct the Securities Investor
Protection Corporation ("SIPC") to initiate a liquidation of Stanford Group
Company ("SGC") under the Securities Investor Protection Act ("SIPA") to
compensate SGC customers whose funds were lost through SGC.
Allen Stanford (" Stanford" ) was the sole owner of Stanford Group
Holdings which is in turn the sole owner of Stanford Group Company ("SGC").SGC is an SEC-registered broker dealer and SIPC Member with offices throughoutthe United States. Stanford was also the owner of Stanford International BankLimited, an offshore bank chartered in Antigua, Vilest Indies; Stanford TrustCoinpany ("STC"), a financial institution chartered in the state of Louisiana where
custoiner accounts were established to hold custody of SIB CDs sold to SGC
customers; and, Stanford Financial Group Company ("SFGC"), which provided
shared services, including treasury and investment services to the Stanford
Entities. Additionally, Stanford also, directly or indirectly, owned more than i3oseparate entities which together with SGC, STC, SFGC and SIB comprised a single,commonly-owned financial services network called the Stanford Financial Group,("SFG"), which was headquartered in Houston, Texas.
6, Sta n ford , along with a close band of confidantes, controlled SFG (of
which SGC, STC, SFGC and SIB were a part). These confidantes included James
Davis as CFO for SFGC and SIB, and Laura Pendergest Holt, Chief Investment
Officer for SFGC.
7, S I B was nothing like a typical commercial bank SIB had oneprincipal financial product certificates of deposit and one principal source offunds customer deposits from CD purchases.
8. Mos t , and perhaps all, of the Stanford Entities, were part of the Ponzi
scheme alleged by the SEC or derived benefit from it. The U.S. Stanford entities
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that were the most closely involved with the sale and redemption of SIB CDs wereSGC and STC. Registered representatives of SGC sold SIB CDs to investors, and
STC held custody of SIB CDs sold by SGC to customers who held IRA accounts at
STC.
9. Th e substantial majority of funds received or utilized by the StanfordEntities, in particular SGC and SFGC, were proceeds from the sale of SIB CDs.
ao. S GC customer funds sent by wire transfer and intended to purchase
SIBI. CDs did not go to Stanford International Bank in Antigua. Once the funds
were received they were managed by SFGC personnel in the U,S.
SGC customer funds were routed through bank accounts in the name
of SIB or STC and then disbursed by SFGC personnel among the Stanford Entities,including SGC.
n. A m ajority of the funds deposited into the operating bank accounts inthe name of SGC at Trustmark National Bank came from sources traceable to SIB
accounts that were funded almost exclusively by customer deposits intended to
purchase SIB CDs. Vhthout income related to SIB CDs, SGC would have beeninsolvent from at least 2oo4 forward (and likely before). Referral fees and CD
related compensation constituted the majority of SGC's revenue in each year from
2oo4 thru 2oa8. Even when this CD related compensation is considered withother income received by SGC in the ordinary course of business, SGC showed
negative cash Qows from operations in each year from 2oo4 thru 2008. The onlyreason SGC's Qnancial statements did not reflect negative cash flows is because
SGC received millions of dollars in capital contributions, which consisted
primarily of SIB CD funds.
x3. T h e substantial majority of funds used to pay loans, bonuses,"Performance Appreciation Rights Plan" ("PAR") payments and commissions to
SGC Qnancial advisors who sold the SIB CDs were the proceeds from the sale of
the SIB CDs,
x4. C D funds not used to pay interest, redemptions and operatingexpenses of the Stanford entities, including commissions for the SGC Qnancial
advisors, up-front bonuses used to recruit the Qnancial advisors and PAR
payments for the financial advisors were either placed in speculative investments
(many of them illiquid, such as private equity deals), diverted to other Stanfordentities "on behalf of the shareholder," i.e. for the beneQt of Allen Stanford, or used
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to finance AHen Stanford's lavish lifestyle (e.g. jet planes, a yacht, other pleasure. craft:, luxuxy cars, homes, travel, company credit card, etc.).
At least from 2ooj until the SEC complaint was filed on Febroary 17,2oo9, SGC customer funds intended for the purchase of SIB CDs were used tomake purported interest and redemption payments on preying CDs becauseSIB did not have sufficient assets, reserves, and investments available to cover thetotal customer deposit habihties, redemptions, and interest payments.
x6. Notwithstanding SIB's insolvency, sales of CDsby SGCcontinueduntil February 16, aoo9 when the SEC and the U.S. Court intervened.
x7. I declare under penalty of perjury that the foregoing is true and
correct.
Van Tassel, CPA
FTI Consulting, Inc.
Executed this ~+ day of February, sou
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MARCO R U BIO COMMITTEESFLORIDA
COMMERCE, SCIENCE, ANDTRANSPORTATION
Bmttd gutta QrtIIIttFOREIGN RELATIONS
SELECT COMMITTEE ON INTELLIGEN
WASHINGTON, DC 20510 SMALL BUSINESS ANDENTREPRENEURSHIP
April 1, 2011
The Honorable Mary L. SchapiroChairman
U.S. Securities and Exchange Commission100 F Street, NEWashington, DC 20549
Dear Chairman Schapiro:
It has been more than two years since thousands of Americans lost their savings in the Stanford
Ponzi scheme. For many of the victims, these losses reflect most, if not all, of their retirement
funds that were accumulated over many years of hard work. I urge the Securities and Exchange
Commission (SEC) to expedite its review of these claims.
I understand that many Stanford investors were customers of Stanford Group Company (SGC), a
broker-dealer that was a member of Securities Investor Protection Corporation (SIPC). I am also
aware that the SEC is in the process of determining whether Stanford Victims qualify for
coverage under the Securities Investors Protection Act ("SIPC coverage"). As you continue to
review and reconstruct the fraud of the Stanford Ponzi scheme, I urge you to prioritize the
determination of whether Stanford Victims qualify for SIPC coverage.
The SEC staff has raised issues with respect to whether Stanford Victims qualify for SPIC
coverage. Before making a forrnal decision, the SEC should consider the facts set forth in theDeclaration of Karyl Van Tassel, which illustrates how the funds for SGC were generally routed
to continue Stanford's fraudulent business practices, rather than purchasing securities.
I respectfully request that the SEC expedite its review of this issue and issue a ruling on SIPC
coverage for victims of the Stanford Ponzi scheme in the near future.
Sincerely,
Marco RubioUnited States Senator (R-FL)
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Pmij.b Pini j.s +enateQ'XSulXGTOX. nC 20.'i10 G90>
April 4, 2011B1l l. iU.sOi
VLOl)ID'
The Honorable Mary L. Schapiro
Chairman
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Dear Chairman Schapiro,
I understand the Securities and Exchange Commission (SEC) is currently considering
whether the thousands of victims of the Stanford Ponzi scheme qualify for reimbursement oflosses under the Securities Investor Protection Act (SIPA).
In 2009, the SEC charged Allen Stanford and his associates with fraud in connection with
Stanford Financial Group's $8 billion certi ficate of deposit investment scheme. Over the last two
years, the victims of Mr. Stanford's scheme have struggled to pay their bills and have had toendure the misery of financial uncertainty regarding restitution. The SEC could have minimized
the magnitude of Mr, Stanford's fraud had it followed-through on the initial investigation and
filed an emergency action against Stanford International Bank in 2005.
Victims in my state of Florida have raised a number of concerns regarding the SEC
review of whether defrauded investors qualify for coverage through the Securities InvestorProtection Corporation. Based on their comments, I am concerned that the SEC review of this
matter lacks a sense of urgency. I encourage you to expedite your review and prioritize the
determination of whether Stanford victims' losses are covered under our securities laws. And
before making a formal decision, I urge you to carefully consider the submissions anddeclarations provided by Stanford victims residing in Florida and around the country.
Thank you in advance for your assistance and attention to this matter. Please keep me
informed of developments as final decisions are inade.
Sincerel
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'BIIittd NtIItta @tmtr.WASHINGTON, DC 20510
April 21, 2011
The Honorable Mary Shapiro
Chairman
Securities and Exchange Commission100 F Street, NE
Washington, D.C. 20549
Dear Chairman Shapiro:
As we have discussed previously, we have been contacted by our Missouri constituents who
were victims of the alleged ponzi scheme propagated by Allen Stanford, Those constituents do
not believe they have received a fair hearing from the Securities Investor Protection Corporation
(SIPC) with respect to the claims they submitted for compensation for their losses in the Ponzischeme. Specifical ly, they believe that SIPC has improperly disregarded arguments and
evidence they have produced to dispute the SIPCs decision to deny coverage,
In order to maintain public trust in institutions like SIPC, it is imperative that claimants receive a
fair hearing and have full access to all appropriate avenues of appeal. It is our understanding that
the Securities and Exchange Commission (SEC) can review and, if it deems such action
appropriate, overturn a SIPC decision on coverage. We would encourage you to bring theStanford claims before the commission for a full review as soon as possible.
The pain and anguish that the Stanford victims have suffered has been particularly acute in light
of the financial crisis. Not only v,ere innocent victims defrauded of billions by Stanford and his
associates, they also saw huge portions of their retirement savings evaporate as financial markets
unraveled. For some of our constituents, their loss was so severe that they now face poverty.
We request a response detailing the efforts the SEC has made to review the Stanford case, a
review by the full Commission and an explanation of the full Commission's subsequent decisionon the matter, and a detailing of what steps the SEC plans to take moving forward. We look
forward to your response.
Sincerely,
Claire McCaskill Roy BluUnited States Senator United States Senator
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STEVE COHEN COMMITTEE ON THE JUDICIAR9TH DISTRICT, TENNESSEE
SUBCOMMITTEES:
1005 L ONGWORTH HOUSE OFFICE BUILDINGCOURTS, COMMERCIAL AND
ADMINISTRATIVE LAW RANKING MEMBWASHINGTON, DC 20515
(Kottgeess of tile 3Ettiteb 8 tates CRIME, TERRORISM, ANDTELEPHONE: (202) 225-3265 HOMELAND SECURITY
FAx: (202) 225-5663 38attse of KepreseotatiuesCOMMITTEE ON
CLIFFORD DAVIS/ODELL HORTON
FEDERAL BUILDINGRasptogion, (I 2 I I515 4209 TRANSPORTATION AND
INFRASTRUCTURE167 NORTH MAIN STREET
SUITE 369 SUBCOMMITTEES:MEMPHIS, TN 38103
AVIATIONHIGHWAYS AND TRANSITTELEPHONE: (901 ) 544-41 31
FAX: (901) 544-4329 WATER RESOURCES AND ENVIRONMENT
www.cohen. house.gov
April 15, 2011
The Honorable Mary L. Schapiro
ChairmanU.S. Securities and Exchange Commission
100 F Street, NEWashington, DC 20549
Dear Chairman Schapiro,
I am wr it ing to urge the Securities and Exchange Commission (SEC) to expedite itsdecision regarding coverage for Stanford Group Company (SGC) customers under the
Securities Investor Protection Act (SIPA). Many of my constituents lost their retirement
savings accumulated over many years as a result of the Stanford Ponzi scheme, and they
have waited for more than 2 years for the SEC's determination on what appears to
be their only potential source of a meaningful recovery.
I am aware of several issues the SEC staff has raised with respect to whether SGC
customers qualify for payments by the Securities Investor Protection Corporation (SIPC)
of up to $500Kof the sto len funds. It i s my understanding that SEC counsel hasinformally stated that Stanford Group Company (SGC) customers are not eligible for
SIPC coverage at this time because SIPC is not meant to compensate customers for the
loss of value in a security or worthless securities. Before making a formal decision, I
request the SEC consider very carefully the Commission's positions taken in the OldNaples Securities and New Times Securities cases as well as the details set forth in
the attached Declaration of Karyl Van Tassel, which demonstrates SGC customers' funds
were not used to purchase securities, but were instead routed through various Stanford
bank accounts before being acquired by SGC to pay the expenses of the brokerdealer. This misappropriation of customer funds by a SIPC member seems to me like it
should be protected under the SIPA.
While I understand the Stanford case is not a "textbook" case for compensation by SIPC,
the bottom line is that investors' funds given to an insolvent broker dealer and SIPC
member to purchase securities were instead stolen while the SEC delayed enforcement
action to put an end to Allen Stanford's fraud for more than 12 years.
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I trust you will make this issue a priority, Please keep me informed of your findings.
As always, I remain,
Most sincerely,
/ y!.= St ve Cohen
Member of Congress
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ROBERT P. CASEY, JR.PENNSYLVANIA
COMMITTEES:
AGRICULTURE, NUTRITION,AND FORESTRY lIIoitol 5tatrs 5mstt
FOREIGN RELATIONS
HEALTH, EDUCATION, WASHINGTON, DC 20510
LABOR, AND PENSIONS
SPECIAL COMMITTEE ON AGINGMay 24, 2011
JOINT ECONOMIC
Honorable Mary SchapiroChairmanSecurities and Exchange Commission100 F Street, NEWashington, DC 20549
Dear Chairman Schapiro,
Over the course of the past two years, I have followed with great interest the efforts of the
Stanford Victims Coalition to obtain protection under the Securities Investor Protection Act. Iwrite to you today because I understand a decision by the Securities and Exchange Commission(SEC) is forthcoming.
As the SEC prepares to announce its formal recommendation, I encourage the Commission toconsider the lack of investor protection in this particular case. According to the Commission's
Office of the Inspector General, the SEC's Fort Worth office first became aware that Stanford
Group Company customers' funds were in jeopardy of being stolen through a possible Ponzischeme in 1997. Despite repeated warnings from the Examination Group at the Fort Worthoffice, the SEC took no enforcement action to safeguard SGC's investor funds. Instead, the
company was permitted to continue perpetrating an $8 billion dollar fraud by selling fictitious
securities to thousands of U.S. citizens, including a number of Pennsylvanians.
I hope that the SEC will continue to work with the victims of this crime to ensure a quick andfair final resolution.
Sincerely,
,$h.Robert P. Casey, Jr.United States Senator
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