Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Friday, March 6, 2009

Court Unfreezes Many Stanford Accounts

On March 5, 2009, the federal district court overseeing the Stanford matter issued an order at the request of Stanford court-appointed receiver Ralph S. Janvey unfreezing approximately 12,000 Stanford investor accounts held at Pershing LLC. The court’s order applies to customer accounts valued at $250,000 or less as of month-end February 2009, and is effective on March 9, 2009. Customers can immediately begin the process of obtaining control of their accounts by arranging to transfer their accounts to a new broker-dealer. To do so, the customer should make arrangements with the new broker-dealer to open a new account.

The court has authorized the release of these accounts unless any of the following conditions apply:

  • They are owned by Stanford shareholders, directors, and certain employees.
    They are owned for the benefit of Stanford companies.
    They are managed by Stanford companies.
    They secure unpaid balances owed by customers or non-purpose loans made to customers.
    They are related to accounts in any of these categories by social security number, address or other similar indicators.

It was reported in the press that some Stanford customers brought suit against the SEC, challenging the freezing of their accounts as an unconstitutional search and seizure.

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