By Sarah N. Lynch
WASHINGTON (Reuters) - President Barack Obama on Wednesday nominated corporate attorney John Mendez to become the next chairman of an industry-backed fund created by Congress to help investors recover their money when brokerages fail.
Currently a partner at the law firm Latham & Watkins, Mendez holds a law degree from Harvard and previously worked at several other top firms including Skadden Arps and White & Case.
If confirmed by the U.S. Senate, Mendez would lead the Securities Investor Protection Corp, a non-profit corporation which has been involved in liquidations in high-profile cases such as the collapse of Lehman Brothers and the fallout from Bernard Madoff's Ponzi scheme.
Mendez will face intense scrutiny in the U.S. Senate, where many lawmakers are pressing the SIPC to be more sympathetic to investors.
SIPC has come under fire by lawmakers from both parties, after the organization declined to launch a court proceeding to help the victims of Allen Stanford's $7 billion Ponzi scheme try to recover some of their losses.
SIPC argued the victims could not file claims because they did not meet the legal definition of "customer" under the law.
The U.S. Securities and Exchange Commission, which oversees SIPC, took SIPC to court to try and force it to allow victims to file claims, but SIPC prevailed in a U.S. appeals court earlier this year.
In July, a bipartisan group of U.S. House and Senate members who are sympathetic to the Stanford victims urged Obama to nominate new directors to SIPC who will implement a cultural overhaul and put investors' interest first.
Five of the seven members of SIPC's board must be appointed by the President. Several seats are currently open, one of which was vacated by former acting chair Sharon Bowen, after Obama nominated her to serve as a commissioner at the Commodity Futures Trading Commission.
Like Mendez, Bowen also previously worked at Latham & Watkins.
Bowen was confirmed to serve at the CFTC by the Senate in a narrow 48-46 vote in June, with many lawmakers voting against her because of their concerns about the Stanford matter.
Senator David Vitter, a Louisiana Republican who has been a strong supporter for Stanford victims, was among the most vocal to oppose her confirmation.
SIPC said in a statement it looks forward to a "speedy confirmation."
(Reporting by Sarah N. Lynch; Editing by David Gregorio)