With great reluctance, its chief says, the agency charged with protecting the financial interests of bilked investors has seized on a legal argument that avoids paying the bilked investors of Allen Stanford — costing many Louisiana families millions of dollars in potential relief.

Like all legal technicalities, the difference between scam artists like Bernie Madoff and Stanford, both now in prison, is arcane. The law creating the public-private Securities Investor Protection Corp. does not apply to Stanford’s Ponzi scheme because the money went to certificates of deposit in a Stanford-controlled Antigua bank.

But Madoff’s victims have received $1.7 billion and counting from SIPC. That’s not nearly the $17 billion that Madoff is estimated to have stolen, but it’s something. Many Louisiana investors in Lafayette, Baton Rouge and Covington were bilked by Stanford and have gotten little or no recovery.

Stanford, 64, is serving a 110-year prison term for his 2012 conviction on multiple counts of mail and wire fraud related to between $5.5 billion and $7 billion in losses by more than 20,000 investors in the U.S. and more than 100 other countries.

A three-judge panel of the District of Columbia appeals court upheld SIPC’s hands-off decision. The Securities and Exchange Commission, the government agency, rightly ordered SIPC to take the Stanford cases; that is after, though, the SEC in earlier decisions was not helpful to the cause of recovery for Stanford victims.

We do not know if further appeals will be forthcoming, but if the appeals court decision stands, the loser is not the SEC which acted properly, if late, to protect American investors from global swindlers. Rather, it is the SIPC’s mission which suffers.

SIPC was created by Congress in 1970 to protect investor money placed with brokerages that failed without ever having purchased the securities selected by their customers. SIPC’s member brokers pay annual fees into the safety net intended to protect such investors.

The safety net is not that much, compared to the losses. An investor’s recovery is capped at $500,000, and many lost their life savings. But when SIPC washes its hands entirely of the second-largest scam in the Wall Street crash of the last decade, what message does that send to investors about the safety net? The good faith of the American securities industry is one of its enormous assets.

The credibility of the industry, rather than bureaucrats at SIPC, suffers when immense frauds of this nature occur. In this case, a legal scalpel is being used to cut a large group of investors from protection.

If Stanford investors were to get something from SIPC, it might cost the fund, and thus the industry, some new increase in dues for a while. But the long-term costs of the Madoff and Stanford scandals require a response better than SIPC provides.