Congressman Steve Cohen Letter to SEC Chairman Mary Schapiro
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STEVE COHEN 9TH DISTRI CT, TENNES SEE COMMIITEE ON THE JUDICIARY (!1:ongres5of tIte Nniteb ~tate5 House of iRl!pr£.6.entatiu£.6 1lIlJa.6llington. 1.f)m 20515-4209 SUBCOMMITTEES: COURTS, COMMERCI AL AND A DM IN IS TR ATI VE LAW- RAN KI NG MEMBER CRIME, TERRORISM, AND HOMELAND SECURITY 1005 LONGWORTH HOUSE OFFI CE BUILDI NG WASHIN TON, DC 20515 TELEPHONE: (202 ) 225- 3265 FAX: (202) 225- 5663 CLIFFORD DAViS/ODELL HORTON FEDERAL B UILOING 167 N OR TH MAIN S TR EE T SUITE 369 MEMPHI S, TN 38103 COMMIITEE ON T RA N SPO RT AT IO N AND INFRASTRUCTURE SUBCOMMITTEES: AVIATION TELEPHONE: (901) 544- 4131 FAX: (901 ) 544-4329 www.cohen.house.gov HI GHWAYS AND TRANSIT WATER RES OURCE S AND ENV IRONMENT April 15, 2011 The Honorable Mary L. Schapiro Chairman u.s. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Dear Chairman Schapiro, I am writing to urge the Securities and Exchange Commission (SEC) to expedite its decision regarding coverage for Stanford Group Co pany (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 SOC customers qualify for payments by the Se urities Investor Protection Corporation (SIPC) of up to $500K of the stolen funds. It is my understanding that SEC counsel has informally stated that Stanford Group Company (SOC) customers are not elig ble for SIPC coverage at this time because SIPC is not meant to compensate customers for the loss f value in a security or worthless securities. Before making a formal decision, I request the SEC consider ery carefully the Commission's positions taken in the Old Naples Securities and New Times Securities cases as well as the details set forth in the attached Declaration of Karyl Van Tassel, which demonstrates SOC customers' funds were not us d to purchase securities, but were instead routed through various Stanford bank accounts before being acquired by SOC to pay the expenses of the broker dealer, This misappropriation of customer funds by a SIPC member seems to me like it should be protected under the SIP A. 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 fr ud for more than 12 years. PRINTE ON RECYCLED PAPER
