U.S. District Judge Robert Scola Jr. ruled that the U.S. Securities and Exchange Commission must defend a negligence lawsuit alleging that the agency failed to act appropriately after concluding that R. Allen Stanford was operating a Ponzi scheme, Bloomberg News reported on Saturday. Investors Carlos Zelaya and George Glantz may proceed with a claim that agency examiners determined four times before 2009 that Stanford was running a Ponzi scheme, Judge Scola ruled on Friday. Stanford is serving 110 years in prison for his $7 billion fraud. The lawsuit claims the SEC had a “nondiscretionary duty” to report Stanford to the Securities Investor Protection Corp., which compensates victims, after examinations in 1997, 1998, 2003 and 2004. The SEC sued Stanford in February 2009, alleging a “massive fraud” at Antigua-based Stanford International Bank.
