Last month, the SEC filed a lawsuit in Dallas federal court against Stanford Financial Group, Allen Stanford, and others. At a hearing conducted without notice to any other party, the Court entered an Order freezing assets and appointing a Receiver. The Order, which later was replaced by a Preliminary Injunction, affected thousands of investors. Drafted very broadly, it was interpreted by the attorney representing the Receiver to prohibit any investors from not only filing cases against the parties sued by the SEC, but further to prohibit all other suits related to the losses sustained by the investors. In fact, on one occasion, the attorneys for the Receiver sought to have an attorney representing investors held in contempt of court for seeking to pursue another lawsuit on behalf of his clients.
Since then, hundreds of investors have sought to intervene in the federal case. Both the SEC and the attorney for the Receiver have opposed their efforts to enter the case to protect their rights. The situation is this: the SEC and Receiver have opposed efforts by investors to protect their rights outside of the federal suit in Dallas, and they have also opposed the efforts of the investors to enter the federal suit in Dallas. Attorneys, including this law firm, representing investors have filed pleadings this week contesting the opposition of the SEC and Receiver to the interventions of investors while the SEC and Receiver are simultaneously moving to prohibit the investors from exercising their legal rights to protect themselves. The pleadings are currently pending before United States District Judge Godbey, and all parties are watching carefully to see what ruling he will make.