BUSINESS REPORT.COM THE FINAL DECISION
The U.S. Supreme Court prepares to hear whether victims of the Stanford Group should be compensated.
By David Jacobs
Published Sep 30, 2013 at 6:00 pm
When the U.S. Supreme Court convenes Oct. 7, justices will hear a case that could decide whether victims of the Stanford Group scandal will finally be compensated, some five years after the Ponzi scheme fell apart.
The case could put the court's conservative justices in a quandary: Do I side with class action attorneys, or with a federal agency that wants to expand its power?
A bit of background: Baton Rouge attorney Phil Preis, arguing on behalf of Stanford Group victims, won at the Fifth Circuit Court of Appeals the right to pursue, in state court, a class action suit against law firms and financial services companies that he says enabled the scheme. That was a big win for the victims, because state law allows for a negligence claim, while federal law requires investors to prove actual knowledge of the fraud, a much higher bar.
Unfortunately for the victims, the high court agreed to review the Fifth Circuit's decision. Tom Goldstein, a prominent Washington, D.C., attorney and publisher of SCOTUSblog, will argue that the Fifth Circuit's decision should stand.
"This is going to establish the law on Ponzi schemes in the United States for years to come," Preis say
He argues that firms that worked with Stanford without probing what should have been obvious fraud should be held liable. Or as he puts it, "don't ask, don't tell" is not a defense. The big fish is SEI, an international firm that manages or administers some $400 billion in assets.
A U.S. Securities and Exchange Commission administrative law judge recently ruled that three former Stanford executives violated antifraud provisions of federal securities laws. The judge says the executives might not have known about R. Allen Stanford's scheme, but they ignored numerous red flags. While that line of reasoning seems to support Preis' argument, at the Supreme Court, the federal government will be supporting the other side.
It says the law, specifically the Securities Litigation Uniform Standards Act of 1998, precludes class actions based on state law that allege "misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security."
Basically, the government says securities fraud is the SEC's turf. And that's generally true. But in this case, the Supremes will have to decide how broadly the phrase "in connection with" should be interpreted.
The feds don't claim the fraudulent Stanford CDs were "covered securities" that might be traded on Wall Street. This was a classic Ponzi scheme; the purported investments underlying the CDs didn't exist. But the Stanford Group sold the CDs while claiming that they were backed, at least in part, by SLUSA-covered securities.----
Therefore, the government's lawyers say, the bogus investments were in fact sold "in connection with" covered securities. And for SLUSA to work, it must be interpreted broadly, and the SEC's views (as the SLUSA
Therefore, the government's lawyers say, the bogus investments were in fact sold "in connection with" covered securities. And for SLUSA to work, it must be interpreted broadly, and the SEC's views (as the SLUSA watchdog) must be given deference.
"Congress intended the phrase 'in connection with' to sweep widely enough to ensure achievement of 'a high standard of business ethics in the securities industry,'" while reining in excessive class actions, the government argues.
But Preis says the SEC is backing what Goldstein calls a "newfound interpretation of the securities laws" to broaden its enforcement power "at the expense of backing the Stanford victims." Since the Stanford products that local investors bought were not sold on the New York Stock Exchange, state law should apply, he says.Regardless, it's an intriguing turn in the SEC's complicated role in the Stanford fiasco.
Many victims blame the regulators for not catching on to Allen Stanford's scheme early. But the SEC backed investors' controversial bid for relief from the Securities Investor Protection Corp., even though the Stanford International Bank in Antigua, which issued the worthless CDs, was never a SIPC member.
The SEC failed to protect local victims from Allen Stanford. From Preis' perspective, the SEC is now failing to protect their interests once again.
Posted by stanfordsforgottenvictim at 12:36 PM No comments:
Labels: Antigua, FINRA, offshore bank, ponzi scheme, Securities Exchange Commission, SIPA, SIPC, Stanford Group Company, Stanford International Bank, Stanford Victims Forum
Stanford Financial Claims 2nd Distribution List September 16th 2013
On September 16 the U.S. Trustee Ralph Janvey filed with the Court of Dallas the second list of scheduled payments under the Plan of Distribution which includes about a thousand affected and a total of $ 3.86 million.
The Receiver will start the process of issuing checks within 10 days of its registration with the Court . Other payments will be scheduled and submitted to the court in the order in which received and processed Certification Forms. To view a copy of the 2nd. Schedule, please click here.
And what happened with the IRS?
And who have their own agenda? Oh yeah! The others... Only the others...
Posted by stanfordsforgottenvictim at 1:30 PM No comments:
Receiver files 1st Schedule of Payments to be Made Pursuant to the Interim Distribution Plan
On August 20, 2013, the Receiver filed his 1st Schedule of distribution payments with the United States District Court for the Northern District of Texas, Dallas Division. The 1st Schedule will be followed by others, each of which will be submitted by the Receiver on a rolling basis as additional responses to Certification Notices are received and processed. To view a copy of the 1st Schedule, please click here.
Posted by stanfordsforgottenvictim at 9:19 AM 1 comment:
The Dallas lawyer accused by the inspector general of the Securities and Exchange Commission of letting R. Allen Stanford get away with defrauding investors of $7 billion is free to practice law again before the SEC.
Barasch denied wrongdoing at the time. He paid $50,000 to the Department of Justice to settle civil claims alleging impropriety stemming from his later decision to take Stanford on as a client, a decision he eventually reversed.
Last year, the SEC suspended Barasch from practicing before the commission, and said he could apply for readmission in one year. Barasch's attorney released a statement at the time saying that Barasch had accepted the suspension to save on legal bills. The settlement order specifically stated that Barasch neither admitted nor denied the wrongdoing described in the order.
Posted by stanfordsforgottenvictim at 7:30 AM No comments:
Stanford Financial Claims 2nd Distribution List Se...