HOUSTON (AP) — Many investors who lost money in the apparentPonzi scheme run by the jailed Texas financier R. Allen Stanfordshould be compensated by a special reserve fund mandated by Congress that protects customers of failed brokerage firms, theSecurities and Exchange Commission said Wednesday.
The S.E.C.’s conclusion differs from a decision by the Securities Investor Protection Corporation, the group that runs the reserve fund. It said two years ago that Stanford’s investors were not eligible for such compensation.
SIPC, an industry-financed group that rescues investors when brokerage firms fail, said it would consider the S.E.C.’s decision before proceeding.
“SIPC’s board will review the referral and analyze the S.E.C.’s underlying documentation as quickly as possible,” SIPC’s chief executive, Stephen P. Harbeck, said in a statement.
An attorney for Mr. Stanford did not immediately return a telephone call seeking comment.
In its statement Wednesday, the S.E.C. said investors in the Stanford Group Company, the financier’s United States brokerage arm, were entitled to protection under SIPC. Officials with the S.E.C. did not immediately know how many investors might be eligible for compensation under the reserve fund.