Vitter’s press secretary, Luke Bolar, told me the senator has been working with SIPC and the SEC in hopes of reaching an agreement. SIPC is expected to present a settlement offer to the SEC next week, Bolar said. I haven’t heard back from SIPC’s spokeswoman yet.
The SEC, however, doesn’t have to agree. It has the authority to sue SIPC and force it to comply with the commission’s order in June. Presumably, some sort of agreement would speed any recovery to Stanford’s investors, who have been waiting for almost three years. SIPC already is covering losses for victims of Bernard Madoff’s Ponzi scheme and is planning to cover customers who lost money in the collapse of MF Global. Some of the brokerages that contribute to SIPC may be getting worried that they will be hit with big assessments to cover the payouts.
Unlike Madoff and MF Global, the Stanford case is more complicated. SIPC doesn’t typically cover certificates of deposit, which is what most Stanford investors bought, but the CDs were sold though Stanford’s SIPC-insured brokerage.
Meanwhile, Stanford Financial’s founder, R. Allen Stanford, is scheduled to appear at a hearing later this month to determine if he’s competent to begin his criminal trial, which is set to start in January.