LEGISLATIVE ALERT 11/12

LEGISLATION TO BE INTRODUCED IN HOUSE, HEARINGS SET  BILL ALSO BEING PREPARED IN SENATE!

    * Garrett & Maloney to introduce legislation in House. Senator Vitter current lead sponsor in Senate
    * House hearings set for 11/21
    * Selective grassroots to commence
    * 5th Anniversary media needs victims willing to be interviewed by media

Dear NIAP Member & Madoff Investor,

 Greetings.  I am excited to announce that SIPC legislation is to be introduced later this week or early next followed by Congressional hearings on Thursday, Nov 21. The legislation is to be jointly introduced by Congressman Garrett (NJ) and Congresswoman Carolyn Maloney (NY).  Similar legislation is expected to be introduced shortly in the Senate as well, consistent with the strategy laid out by Congressman Garrett in the last Congress.

The intention is to have the legislation introduced by approximately 15 co-sponsors, and followed by an extensive outreach effort via Garrett’s and Maloney’s offices, our lobby team and our own grassroots efforts to ramp up sponsorship numbers.

 The specific bill language is still going through final stages, and a bill number and title will be finalized shortly. We will make the bill public as soon as we receive the final version.  As you probably know, it prevents clawback of the innocent, insures SIPC payments to $500,000 based on account statements, and gives the SEC authority over SIPC.

 After hearings, the bill will be moved to a mark-up session in the House Subcommittee on Capital Markets, voted on and moved to the Financial Services Committee.

  Next Steps on Grassroots. We will want to focus our House grassroots efforts on key Financial Services Committee members, as well as other influential House members, particularly those in districts or states with sizeable Madoff and Stanford victim constituents.  Our Senate strategy will focus on Senate members on the Senate Banking Committee and other key Senate members.

  The first wave of Grassroots letters and communications however will go out to those who are sponsoring the legislation at introduction, thanking them for their support and encouraging their reaching out to their colleagues to do the same.

 Stay Tuned!  In the coming days we will be providing more detailed information, as well as laying out the details for the grassroots outreach.  We will also undertake a rapid fundraising campaign to assist costs of Congressional hearings and grassroots support.

  We look forward to working with all previous and current leaders in this effort as well.

  Game on!
  Most sincerely,
 Ron Stein, CFP
 President, NIAP

CONTACT INFORMATION:

Victims Needed for Media interviews & Congressional testimony

Volunteers and Funds Needed. Please assist us in whatever way you can!

Email us at: djmionis@investoraction.org
              rstein@investoraction.org

Call us at: 800-323-9250

www.investoraction.org
www.fixsipcnow.com

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

SEC Can't Force Help For Stanford Victims, DC Circ. Told

The Securities Investor Protection Corp. asked the D.C. Circuit on Monday to affirm a landmark district court ruling declaring it doesn’t owe compensation to victims of Robert Allen Stanford’s $7 billion Ponzi scheme, suggesting the U.S. Securities and Exchange Commission succumbed to political pressure in bringing the suit.

The SIPC asked the appeals court to affirm U.S. District Judge Robert L. Wilkins’ decision dismissing the agency’s application to compel the SIPC to pay the fraud victims’ claims through a liquidation proceeding.

A top agency official had originally agreed that the SIPC did not owe funds under the Securities Investor Protection Act, SIPC claims, but that changed after U.S. Senator David Vitter, R-La., threatened to block the nominations of two SEC officials in June 2011, the SIPC said.

“The record shows that the SEC's general counsel agreed that SIPA did not apply to the Stanford case,” the SIPC said. “It was only two years later that the SEC sought to force SIPC's hand, apparently bowing to pressure from a U.S. senator,” referencing a June 14, 2011, press release from Vitter.

The corporation, funded by the brokerage industry to cover investors who lose money in failing firms, also claims the SEC didn’t seek a liquidation until two years after its 2009 case against Stanford.

“If the SEC had thought the Stanford fraud was within the scope of what SIPA protects, it was under a legal obligation to notify SIPC immediately,” the SIPC said. “The SEC did not do so, even though it filed an enforcement action against Stanford and secured the appointment of a receiver over U.S. Stanford assets in February 2009.”

On July 3, Judge Wilkins ruled that Stanford's U.S.-based Stanford Group Co. was a member of the SIPC, but that the Antigua-based Stanford International Bank was not. Stanford International Bank Ltd. was an offshore bank, not a registered broker-dealer, which is what the SIPC oversees, Judge Wilkins said.

Judge Wilkins’ decision was a major blow to victims of the Ponzi scheme, who together lost upwards of $7 billion in certificates of deposit administered by Stanford International Bank. It also carried broader legal significance, marking the first time since the enactment of SIPA 42 years ago that a federal court had ruled on how much power the SEC has to command a SIPC liquidation.

The U.S. Supreme Court has ruled that brokerage customers cannot force such proceedings, but that the SEC has the authority to do so.

Because of its precedential nature, a key issue in the Stanford dispute was the standard of proof required of the SEC. The agency argued for a more lenient standard than the SIPC did, describing its burden as merely probable cause supported by hearsay. Judge Wilkins ultimately chose the higher standard requested by the SIPC: a preponderance of the evidence. In an SIPC liquidation, an investor must meet a preponderance standard to prove the validity of his or her claim.

In its appellate brief filed in January, the SEC said Judge Wilkins had taken a too-narrow view of the term "customer." The agency argued that transactions with both Stanford entities should be treated the same way under SIPA because the company operated “as a single fraudulent enterprise that ignored corporate boundaries.”

“This interpretation of the statute to allow for flexibility in certain circumstances is the correct one, and it is at least a reasonable one that was entitled to deference by the district court,” the SEC said.

The SEC added that it was not seeking customer status for all Stanford investors, but only for those who held accounts with Stanford Group Co., purchased fraudulent certificates of deposit through SGC and deposited funds with Stanford International Bank Ltd.

But SIPC said Monday that the terms of its mission were clear: to protect investors when a member brokerage fails, adding that Judge Wilkins' purportedly narrow view of the term 'customer' was appropriate.

"By its terms, the statute does not insure against fraud or investment losses, instead protecting only the 'customer' property that an SIPC-'member' brokerage firm holds in custody when the brokerage fails,” the corporation added.

The corporation also said the SEC’s case was unprecedented because it has not made similar requests in proceedings related to the downfall of a major financial institution.

“In 40 years and over 300 liquidation proceedings — including the recent liquidations ofLehman Brothers Inc., Madoff Investment Securities LLC, and MF Global Inc. — this is the first the the SEC had ever tried to compel a liquidation. '

Stanford was sentenced in June to 110 years in prison for his role in the fraud.

SIPC is represented by Edwin John U, Eugene F. Assaf Jr., John C. O'Quinn, Michael W. McConnell and Elizabeth M. Locke of Kirkland & Ellis LLP.

The case is U.S. Securities and Exchange Commission v. Securities Investor Protection Corp., case number 12-5286, in the U.S. Court of Appeals for the District of Columbia Circuit.

Source: http://www.sivg.org/article/2013_SEC_Cant_Force_Help_For_Stanford_Victims.html

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Stanford Victim Penny-a-Dollar Payment Plan Goes to Judge

R. Allen Stanford’s investors may recoup some of their losses more than four years after the Stanford Group Co. founder was sued by the U.S. Securities and Exchange Commission and put out of business.
Ralph Janvey, the receiver appointed by a federal judge in 2009 to marshal and liquidate Stanford’s personal and business assets, today asked permission to make a $55 million interim distribution to about 17,000 claimants, or about 1 cent for each of the $5.1 billion lost in the fraud scheme.
“We will follow it up in a subsequent distribution as the money comes in,” Janvey’s attorney, Kevin Sadler of Baker Botts LLP, told U.S. District Judge David Godbey today in Dallas.
The proposed payout would trail the more than $5.4 billion paid to victims of Bernard L. Madoff, who was arrested in December 2008; about $4.9 billion paid clients of the MF Global Inc. brokerage after its parent MF Global Holdings Ltd. failed in October 2011; and the $123 million interim distribution for victims of Peregrine Financial Group Inc. founder Russell Wasendorf, who prosecutors last year said stole $215 million.
“No distribution plan can satisfy every claimant,” Janvey’s lawyers said in a Feb. 12 court filing. “But the receiver’s interim plan, which drew only three objections from thousands of claimants, comes remarkably close.”
Cross-Border Protocol
Godbey didn’t rule today on Janvey’s bid for payment plan approval. The judge granted a request to approve the Cross- Border Protocol, a cooperation agreement between the Dallas court-appointed receivership and U.S. authorities on one side, and Antiguan court-appointed liquidators of Stanford assets outside the U.S. on the other. That approval could boost investors’ final recovery.
“The court finds the motion to be well-taken,” Godbey said in a two-page order. He heard more than two hours of argument this morning.
A federal jury in Houston last year found Stanford, 63, guilty of lying to investors about the nature and oversight of certificates of deposit issued by his Antigua-based bank. The jurors decided he must forfeit $330 million in accounts seized by the U.S. government.
Sentenced to 110 years in federal prison, Stanford has appealed the verdict.
Godbey today asked Sadler whether it was proper to distribute Stanford’s money before entering a final order in the SEC case against the financier and his businesses.
No Precedent
No legal precedent requires Godbey to first issue such a ruling, Janvey’s lawyer replied. He also told the judge that in a prior decision he said “not a nickel” of the money recovered by the receiver from Stanford entities was not taken by fraud.
One objection to the payout plan came from the law firm Curtis, Mallet-Prevost, Colt & Mosle LLP. A lawyer for the firm, Myles Bartley, told the judge today that it’s owed $1.4 million for work done for Stanford entities and isn’t included in the first group of distributions.
Sadler said there would be enough funds to resolve those claims even if the judge approved the proposed payment plan.
In an e-mailed statement, Sadler called the judge’s ruling today “a significant milestone” in the receivership’s effort to get money to Stanford fraud victims.
Godbey’s order requires the Janvey receivership and the Antiguan liquidators to “perform in accordance with their rights and obligations as outlined in the settlement agreement.”
Long Dispute
Lawyers for both factions battled for months for control of $300 million of Stanford assets outside the U.S.
“So long as it continues, millions of dollars in assets that could otherwise be distributed to victims of the Stanford Ponzi scheme will remain tied up in the courts,” Sadler told Godbey in a filing last month.
The liquidators, Grant Thornton International Ltd. accountants Hugh Dickson and Marcus Wide, joined in the approval request through a separate filing.
For dropping their dispute with Janvey and the U.S. Justice Department, the Antiguan liquidators will receive fees of $36 million from Stanford’s frozen funds in the U.K., according to a statement jointly released by both receivers on March 12. The Antiguan liquidators already have received $20 million from the U.K. accounts.
About $23 million in Canadian funds and $132.5 million in Swiss funds will be transferred to the Justice Department and Janvey for distribution to investors through a system the U.S. receiver is establishing, according to the joint statement.
‘Ransom’ Payment
Angie Shaw, a founder of the Stanford Victims Coalition, has denounced the agreement as “ransom” that rewards the Antiguan liquidators at the investors’ expense.
“There is no Plan B,” Sadler told the judge.
Edward H. Davis Jr., an attorney for the liquidators, told Godbey today that an Antiguan court approved the agreement this week.
He said the agreement funds a “war chest” for the liquidators to further pursue lawsuits.
“The Joint Liquidators are pleased to have obtained the approval of the settlement from the High Court in Antigua this past Monday,” Davis said today in an e-mailed statement.
Attorneys representing law firms already defending suits filed by Janvey in the U.S. objected to the accord, arguing that it would result in more litigation offshore.
“There is obviously a jurisdictional issue,” Godbey said. “There is no getting around it.”
Fees Paid
Janvey’s professionals had been paid $63.3 million in fees and expenses as of Feb. 7, according to his most recent status report. That represents about a quarter of the $230.2 million Janvey has recovered for the estate. He has paid out $53.3 million more in costs to wind up Stanford’s business interests.
Shaw couldn’t immediately be reached for comment on Godbey’s ruling this afternoon. Peter Morgenstern, an attorney who serves on the official Stanford Investors Committee, also didn’t immediately reply to voice-mail and e-mail requests for comment.
An additional $4.1 million in Stanford-related assets have been identified in an account held by Pershing LLC, according to a court filing by Sadler yesterday seeking an order for the turnover of those funds.
The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston).

Source: http://sivg.org/forum/view_topic.php?t=eng&id=58

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/