Allen Stanford was sentenced in June to 110 years in prison for bilking investors with fraudulent certificates of deposit issued by Stanford International Bank, his bank in Antigua.

Since 2009 when Stanford was first arrested and charged, victims of the fraud have been fighting for SIPC to start a liquidation proceeding in the hope of getting back at least some of the funds they lost.

"The court is truly sympathetic to the plight" of the victims, Judge Robert Wilkins for the U.S. District Court for the District of Columbia wrote in dismissing the SEC's case. "But this court has a duty to apply the SIPA statute as written by Congress."

This marks the first time in the 42-year-history of the Securities Investor Protection law that the SEC asked a court to try and force SIPC to start a liquidation proceeding.