Naturally, many of those optimistic CD buyers ended up losing their shirts when the operation was busted.
On Wednesday, the Securities and Exchange Commission, or SEC, announced that some of those investors will be getting their money back.
From the press release:
The Commission further determined that, in light of all of the facts and circumstances in this case, the customers' claims should be based on their net investment in the fraudulent CDs used to carry out the Ponzi scheme.
A SIPA (or Securities Investor Protection Act) liquidation proceeding would allow investors with accounts at SGC to file claims with a trustee selected by SIPC. The trustee would decide whether the investors have "customer" claims that are protected by the statute. An investor who disagreed with the trustee's determination could seek court review.
SIPC is somewhat similar to the FDIC but for brokerages. It stands for the Securities Investor Protection Corp.
That doesn't sound like the aggrieved parties will be guaranteed restitution but it may be something.
CDs are generally one of the safest investment vehicles available. That makes them appealing bait for scammers to use. If you see an offer for dizzyingly high CD rates, think twice before reaching for your checkbook.
Read the blog post "More ways to sniff out a CD scam" for more on staying safe when shopping for a CD.
Get more CD and Investing News with our free weekly newsletter.
Follow me on Twitter.