Montag, 30. Juli 2012

Order re. Chapter 15 / COMI

July 30, 2012
By U.S. District Judge David C. Godbey
The Court grants the Joint Liquidators' motion for substitution as Plaintiff nunc pro tunc to June 8, 2010 and grants in part and denies in part their request that the Court take judicial notice. The Court overrules the parties' objections to each others' evidence. Finally, because the Stanford Entities' COMI is in the United States and they have an establishment in Antigua, the Court grants the Antiguan Proceeding foreign nonmain recognition, granting in part and denying in part the Joint Liquidators' petition for recognition. The Court grants the Joint Liquidators limited, conditional relief under Chapter 15.

In accordance with this Order, the Court orders the Clerk of the Court to terminate Peter Wastell and Nigel Hamilton-Smith as Plaintiffs and add Marcus Wide and Hugh Dickson as Plaintiffs.

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Dienstag, 24. Juli 2012

Motion To Intervene and To Suspend the Memorandum Opinion and Order of July, 3, 2012

July 24, 2012
By Richard R. Cheatham
Pursuant to Fed. R. Civ. P. 24 Richard R. Cheatham moves to intervene in this action in order to protect his interest in the subject of the action and pursuant to Fed. R. Civ. P. 59 to suspend the Court's Memorandum Opinion and Order of July, 3, 2012 pending reconsideration in light of the facts presented in connection Intervener's Motion to Intervene.

In support of this motion, Richard R. Cheatham relies on the Court's Memorandum Opinion and Order of July, 3, 2012 and his Memorandum In Support of Motion To Intervene and To Suspend Memorandum Opinion and Order of July, 3, 2012.
SENATE and HOUSE letter to Schapiro
On July 24, 2012, Richard Cheatham filed a motion to intervene and to "suspend" the Court's July 3 Opinion—three weeks after the fact. Although he provides no documentary evidence in support of his assertions, Cheatham contends that brokers from the Stanford Group Company ("SGC") purchased Stanford International Bank, Ltd. ("SIBL") CDs for him without his knowledge, and that the SEC failed to consider the "atypical" nature of these CD purchases in pursuing its case. The Court should reject Cheatham's thirteenth-hour motion for three separate and independent reasons...

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Dienstag, 17. Juli 2012

HSBC lapses left US economy exposed to exploitation by terrorists - Senate report

July 17, 2012
By Richard Blackden
HSBC left America's financial system exposed to exploitation by drug cartels and terrorist organisations due to its failure to comply with anti-money laundering laws, according to a damning US Senate report.

These are two of the findings in a 340-page study from the US Senate that accuses Britain's biggest bank of a series of compliance lapses between 2004 and 2010.

HSBC, the only British bank with a branch network in America, failed to properly staff its compliance department and wrongly designated Mexico as a "low-risk" country.

The findings are a major embarrassment for HSBC, some of whose senior executives will appear before the Senate committee tomorrow to explain the failings.

In one of the more damaging accusations, the report says HSBC resumed providing banking services to a Saudi Arabian bank despite speculation it had links to financing terrorism.

In an emailed statement, HSBC said the Senate report had provided "important lessons for the whole industry in seeking to prevent illicit actors entering the global financial system".

The bank said it is spending more money on compliance and has become more coordinated in policing high-risk transactions.

HSBC is also criticised by the committee for designating Mexico as "low-risk" despite the widespread use of the country's banking system by drug cartels. The decision made it easier for money to be moved between HSBC's affiliate bank in Mexico and its network in the US. Its Mexican bank should have been treated as a "high-risk correspondent client subject to enhanced due diligence and monitoring," the report said.

The report also contained strong criticism of the Office of the Comptroller of the Currency, a top US bank regulator, saying the regulator failed to crack down on the bank despite multiple red flags, allowing money laundering issues "to accumulate into a massive problem".

HSBC has warned investors that it could face a significant fine in the US, with some analysts speculating the penalty could reach $1bn.

"Accountability is essential and that is what has been missing here," said Carl Levin, the chairman of the committee on permanent investigations. HSBC said last night that it had taken several steps to improve its compliance, including doubling its spend on compliance and enforcing standards globally.

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Donnerstag, 12. Juli 2012

Bill Cassidy request that SEC file an appeal

July 12, 2012
By Bill Cassidy
Dear Chairwoman Schapiro,
I write to respectfully request that the Securities & Exchange Commission (SEC) file an appeal with the U.S. Court of Appeals, District of Columbia Circuit, seeking to overturn the July 3, 2012 ruling by U.S. District Court Judge Robert L. Wilkins in the matter of SEC v. Securities Investors Protection Corporation (SIPC), Civil Action No. 11-mc-678.

As you know, this case involves the matter of restitution for the victims of the former Stanford Financial Group under the Securities Investor Protection Act (SIPA) of 1972. In July of 2011, in its capacity as the regulator of SIPC, the SEC ordered a liquidation and payment under SIPA to certain affected customers of the former Stanford companies. SIPC however, refused to comply with the SEC’s order, which led to the court proceedings and ultimately, the decision rendered by Judge Wilkins denying SIPA coverage for the Stanford victims.

In the Sixth Congressional District of Louisiana and throughout the country, financial restitution under SIPA represents the last hope for many of Stanford’s victims to regain that which was taken from them more than three years ago. All I ask on behalf of these American citizens is for the SEC to honor the commitment they made back in July of 2011 by continuing to pursue all legal avenues which could result in the determination by the SEC that Stanford’s victims are entitled to SIPC coverage.

As the United States Representative for the area perhaps hardest hit by this tragedy, I have been confronted almost daily since my service began in 2009 with the heartbreaking stories and tragic outcomes that have befallen my constituents affected by Stanford. Enclosed with this letter is a message sent to me by one of those Louisiana citizens, Jean Ann Mayhall, who speaks both of the devastating impact of this ruling and offers a number of compelling arguments for the SEC to consider as you to decide whether to pursue an appeal. Ms. Mayhall’s words undoubtedly represent the hopes of thousands of Stanford victims who will quite literally see any chance for strongly consider those views during your deliberative process.

Once again, I ask you to continue to pursue the course of action that began when the SEC declared, rightfully, that many of the Stanford victims are entitled to coverage from SIPC by filing to appeal the ruling by Judge Wilkins. If I can provide any assistance or support to you or the SEC, please contact me at 202-225-3901. Thank you.

Bill Cassidy
Member of Congress

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Dienstag, 3. Juli 2012


July 3, 2012
By U.S. District Judge ROBERT L. WILKINS
The Court is truly sympathetic to the plight of the SGC clients who purchased the SIBL CDs and now find themselves searching desperately for relief. Robert Allen Stanford's 110 year sentence may bring some measure of justice to the SGC clients, but it will not make them financially whole. But this Court has a duty to apply the SIPA statute as written by Congress, and, as other courts have done, this Court also has a duty to construe narrowly the "customer" definition of the statute. For the foregoing reasons, the SEC has failed to meet its burden, by a preponderance of the evidence, of proving that SIPC has "refus[ed] . . . to commit its funds or otherwise to act for the protection of customers of any member of SIPC." Indeed, because the issue turns on uncontested facts and an interpretation of law10, the Court holds that the SEC would have failed to meet even the lesser burden of probable cause. The Application of the SEC is therefore denied. An Order accompanies this Memorandum.
Upon consideration of the Application of the Securities and Exchange Commission to compel Respondent, Securities Investor Protection Corporation, to commence a liquidation proceeding (Docket No. 1), the oppositions and replies thereto, and oral argument, and for the reasons set forth in the accompanying Memorandum Opinion, it is hereby ORDERED, that:
The Application of the Securities and Exchange Commission is DENIED; and it is, FURTHER ORDERED that this case is dismissed with prejudice.

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Government accused of negligence in suit

July 3, 2012
By Edward J. Gonzales III
Seven Baton Rouge residents and firms are suing the federal government for negligence and misconduct they say caused their loss of approximately $3.5 million to the massive Ponzi scheme operated by Houston entrepreneur Robert Allen Stanford.

"You can't sue the government simply for making mistakes," attorney Edward J. Gonzales III said; "You can sue the government for negligence and deliberate misconduct," Gonzales added.

It is clear that the OIG report found violations of federal laws and regulations by Barasch. He violated those rules and duties to the investing public in general and to these plaintiffs in particular. In addition, Barasch may have committed multiple criminal violations of 18 U.S.C. § 1519 as well as other violations that facilitated Stanford's crimes and obstructed federal investigations. Had Barasch not done as he did, none of the plaintiffs would or even could have invested with SIBL - it's doors would have been shut - and the damages suffered by the plaintiffs would have been completely avoided. Like the federal employees in Limone v United States, 497 F. Supp. 2d 143 (D. Mass 2007); 579 F 3d 79 (2d 2009), who engaged in subordination of perjury and obstruction of justice in the course of their duties as federal agents, Spencer Barasch has by his conduct rendered the United States liable to the plaintiffs.

Alternatively, the conduct of Spencer Barasch referred to herein was negligent.

Additionally, the failure of Barasch's superiors to properly review and supervise his conduct - simply put, to find out that he was not making outside referrals as he said he was - was negligence, not an exercise of law enforcement discretion or policy discretion. They did not "decide to allow" this conduct. Rather, they should have discovered it and negligently failed to do so. Had they identified Barasch's misconduct, there is no doubt that the SEC and other agencies would then have acted differently and effectively against Stanford.

The plaintiffs purchased their investments, which have been determined to be without value by the Stanford Receiver. The government is therefore liable to the plaintiffs in the amounts they purchased. As further damages for loss of their opportunities to earn on their investments, the plaintiffs also claim as damages the interest that investments in legitimate CD accounts would have earned since the date the receivership was filed, until paid.

Plaintiffs bring this case on behalf of themselves and on behalf of all persons or entities, who have suffered losses of investments with Stanford International Bank, and file administrative response, excluding any class member who timely elects to be excluded from the Class ("the Class"). Plaintiffs allege that all such class members were damaged or sustained investment losses as a proximate cause and result of the negligence and deliberate misconduct by Spencer Barasch and the negligent supervision of Barasch by the SEC.

As of the present date, the United States of America has the administrative ability to identify all members of the Class, as it has received their claims.

Membership in the Class is so numerous as to make it impractical to bring all Class Members before the Court. The exact number of Class Members is unknown, but can be determined from the United States of America's claim records. Plaintiffs reasonably estimate and believe that there are approximately two thousand (2,000) in the Class. Although Plaintiffs do not presently know the names of all Class Members, their identities and addresses can be readily ascertained from the United States of America's records.

Plaintiffs and all Class Members have suffered similar damages as a result of the negligence and intentional misconduct of the United States of America's employee, Spencer Barasch, as well as the negligent supervision of its employees of the U.S. Government.

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