Stanford Investors, Unlike Madoff’s Get No SIPC Help

Stanford Investors, Unlike Madoff’s Get No SIPC Help - 9/4/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

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Stanford Investors, Unlike Madoff’s Get No SIPC Help
Laurel Brubaker Calkins and Andrew M. Harris

Bloomberg. September 4, 2009
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EXCERPT: Peter Kaltman, a retired accountant, says he was reassured by the Securities Investor Protection Corp. logo on the stationery of the brokerage that sold him $550,000 in Stanford International Bank certificates of deposit. “The CDs were sold by a SIPC-insured organization,’’ Kaltman said, referring to Stanford Group Co., the Antigua-based bank’s sister firm. “At the bottom of their business cards and stationary, there was the SIPC logo. Any correspondence I received with account information also had it. I absolutely thought I was covered.” Kaltman was wrong, unfortunately for him and other investors who lost $7 billion in the alleged Ponzi scheme involving Stanford CDs. The federal corporation won’t help any of them as it has some victims of swindler Bernard Madoff, SIPC’s president notified Stanford’s court-appointed receiver. […] Some investors’ lawyers complain SIPC is splitting hairs by limiting coverage to securities that are “missing” instead of rendered worthless by fraud. “It’s a distinction without a difference,’’ Houston lawyer Michael Stanley said of SIPC’s interpretation. “The Madoff clients’ securities were never there, so SIPC covers that loss and has been paying like slot machines,” Stanley, who represents Stanford investors, said in an interview. “But SIPC doesn’t pay if the underlying securities are there but the value has dropped, even if it dropped because of hanky panky. If you’ve got the certificate, SIPC says it is not paying.” Stanford receiver Ralph Janvey asked SIPC last month if investors’ losses on the Antiguan CDs could be partially covered. “Unfortunately, the answer is no,” Janvey said in a statement posted on his Web site. Janvey’s spokeswoman Nancy Sims said he won’t take further action on the matter because he “doesn’t believe there’s an appeal process available to him.”

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