Wow, ..it looks like the SEC may have accidentally discovered it's crotch late one night in the dark....... Heaven forfend that they should ever get off their round ends and actually deal with the Naked Shorting and DTCC-vaporshare-shuffle BS..!!!
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SEC charges Stanford in alleged $8 bln scheme
By Alistair Barr, MarketWatch
Last update: 12:44 p.m. EST Feb. 17, 2009
SAN FRANCISCO (MarketWatch) -- The Securities and Exchange Commission said Tuesday it charged Robert Allen Stanford and three of his companies with defrauding investors in an alleged $8 billion certificates of deposit scheme.
Stanford's Antigua-based bank, Stanford International Bank, sold roughly $8 billion of certificates of deposit to investors through a network of financial advisers by promising "improbable and unsubstantiated" high interest rates, the SEC said in a statement.
The rates were "supposedly" earned through the bank's investment strategy, which "purportedly" allowed the bank to achieve double-digit returns on its investments for the past 15 years, the regulator added.
The SEC also charged Stanford International Bank's Chief Financial Officer James Davis and Stanford Financial Group's Chief Investment Officer Laura Pendergest-Holt.
"Stanford and the close circle of family and friends with whom he runs his businesses perpetrated a massive fraud based on false promises and fabricated historical return data to prey on investors," said Linda Chatman Thomsen, the SEC's enforcement division director, in a statement.
The charges come roughly two months after Bernard Madoff was arrested for allegedly running a Ponzi scheme that could leave investors with as much as $50 billion in losses.
Like Madoff's business, the SEC said Stanford International Bank is run by a close circle of Stanford's family and friends. SIB's investment committee, responsible for the management of the bank's multi-billion dollar portfolio of assets, is comprised of Stanford; Stanford's father who resides in Mexia, Tex.; another Mexia resident with business experience in cattle ranching and car sales; Pendergest-Holt, who prior to joining SFG had no financial services or securities industry experience; and Davis, who was Stanford's college roommate, the SEC said.
Stanford's companies include Antiguan-based Stanford International Bank, Houston-based broker-dealer and investment adviser Stanford Group Co., and investment adviser Stanford Capital Management.
In the wake of the Madoff scandal, Stanford International Bank tried to calm its investors by falsely claiming the bank has no "direct or indirect" exposure to the Madoff scheme, the SEC said.
The SEC also alleged an additional scheme relating to $1.2 billion in sales by SGC advisers of a proprietary mutual fund wrap program, called Stanford Allocation Strategy (SAS), by using materially false historical performance data.
The SEC's complaint said that the false data helped SGC grow the SAS program from less than $10 million in 2004 to more than $1 billion, generating fees for SGC (and ultimately Stanford) of approximately $25 million in 2007 and 2008.
The fraudulent SAS performance was used to recruit registered investment advisers with significant books of business, who were then heavily incentivized to reallocate their clients' assets to SIB's CD program, the SEC added. End of Story
Alistair Barr is a reporter for MarketWatch in San Francisco
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