A bipartisan group of U.S. House and Senate members is seeking to make it easier for investment fraud victims to seek compensation, after investors in Allen Stanford's Ponzi scheme were deemed ineligible under current law to file claims, Reuters reported yesterday. The bill, introduced by Sens. David Vitter (R-La.), Charles Schumer (D-N.Y.), Reps. Scott Garrett (R-N.J.) and Carolyn Maloney (D-N.Y.), would bestow greater powers on U.S. securities regulators to oversee the process of determining whether customers of failed brokerages qualify for compensation. The legislative proposal comes as the Securities and Exchange Commission awaits a crucial decision from a U.S. appeals court over the fate of the Stanford victims. The SEC is trying to get the court to force an industry-backed fund that protects investors to start court proceedings so Stanford victims can file claims to recover a least a portion of the millions they lost. The Securities Investor Protection Corp., or SIPC, which administers the fund, has refused the SEC's request, saying Stanford investors do not meet the legal definition of "customer" under the federal law designed to protect investors if their brokerage collapses.
