The Securities and Exchange Commission filed the lawsuit in federal court Monday against the Securities Investor Protection Corp., which runs an industry-funded reserve fund that protects customers of failed brokerage firms. It was the first time the federal agency has sued SIPC.
SIPC has maintained that Stanford investors weren't eligible for such compensation because they bought certificates of deposit issued by a bank.
The bank was owned by Stanford, who was indicted by a federal grand jury in 2009. He disputes the charges and is scheduled for trial in January. SIPC spokesmen couldn't be reached.