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Bloomberg – Stanford Group Co.’s court-appointed receiver and securities regulators asked a U.S. judge to deny requests by hundreds of investors to join the regulatory lawsuit at the heart of an $8 billion fraud investigation.
The receiver, Ralph Janvey, and the U.S. Securities and Exchange Commission yesterday filed papers in federal court in Dallas opposing the requests by more than 45 groups of investors and creditors who have asked permission to join the SEC’s suit against R. Allen Stanford.
“Allowing all the investors to intervene in the enforcement action would destroy any hope for an efficient distribution of assets,” Janvey said in a court filing late yesterday. He said he’s working “as quickly as possible to release more accounts through a certification process” designed to free all frozen funds not directly linked to the suspected fraud.
Most of the groups asking to join the SEC’s fraud case are investors whose brokerage accounts were frozen along with Stanford’s personal and corporate assets when regulators sued the Texas financier, two associates and three affiliated companies on Feb. 17. Stanford is suspected of orchestrating the fraud through the sale of high-yield certificates of deposit by Antigua-based Stanford International Bank.
Last week, Janvey won court approval to release $4.6 billion from about 28,000 frozen brokerage accounts. U.S. District Judge David Godbey extended the freeze on more than $1 billion in about 4,000 remaining Stanford accounts, most of which belong to Stanford employees or executives or are linked to investments issued by the Antiguan bank.
Reuters – Two employees of Allen Stanford’s financial business, which U.S. regulators have accused of massive fraud, held advisory roles at a watchdog group overseeing U.S. broker-dealers aimed at preventing abuses.
Lena Stinson, director of global compliance at Stanford Financial Group, served on the membership committee of the Financial Industry Regulatory Authority, or FINRA, which describes itself as the largest independent regulator of U.S. securities firms.
Frederick Fram, the chief operating officer of Stanford Group Holdings, served on the FINRA continuing education content committee, "where he participates in creating material for the Regulatory Element continuing education program," according to a biography on Stanford’s website.
The Stanford executives resigned from their posts last week at FINRA’s request, Brendan Intindola, a FINRA spokesman, said.
Stanford Group Co is a member of FINRA. Calls to Stanford’s Houston offices were not answered.
The firm referred all press inquiries to the U.S. Securities and Exchange Commission, which last week accused the Texas billionaire and two of his associates of a "massive ongoing fraud" related to the sale of $8 billion in certificates of deposit.
Bloomberg – Gather round, children, to hear about the investments you’ve been waiting for. They suggest that you might get positive returns in any economic climate, regardless of whether stocks are going up or down.
Wait — don’t run! It’s not Bernard Madoff or even R. Allen Stanford, the mini-Madoff, who allegedly bilked savers out of $8 billion in supposedly high-rate certificates of deposit. It’s sanctified by hedge funds and brought to you by America’s finest financial engineers. What could be more inspirational than that?
I’m talking about the mutual funds whose investment strategies aim to be “market neutral” or to deliver “absolute returns.” Morningstar in Chicago, which publishes fund data, currently has 28 of them on its list, up from a handful five years ago.
In the News – A fund of hedge funds run by two members of US vice president Joe Biden’s family was marketed by firms connected to Sir Allen Stanford, it has been claimed.
The Texan billionaire is facing charges over a $9 billion fraud involving certificates of deposit with unrealistically high interest rates from his Stanford International Bank in Antigua.
The claims have rocked the worlds of investment and sport, with Sir Allen heavily involved with English cricket.
New York (HedgeCo.Net) – The Securities and Exchange Commission charged Texas businessman Robert Allen Stanford yesterday along with three of his companies for running a fraudulent $8 billion investment scheme.
"We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world," said Rose Romero, Regional Director of the SEC’s Fort Worth Regional Office.
According to the allegations, Stanford International Bank sold approximately $8 billion of so-called “certificates of deposit” under the pretense they would yield extremely high interest rates thanks to SIB’s unique and one-of-a kind investment strategy. These CD’s were peddled as safe under the false notion that the bank re-invests the funds in liquid instruments while being under the constant supervision of 20 analysts and Antiguan regulators.
U.S. District Judge Reed O’Connor issued a temporary restraining order and appointed a receiver to the assets, which have all been frozen.
“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, Director of the SEC’s Division of Enforcement. "We are moving quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors."
The companies involved in the scheme include Antigua-based Stanford International Bank, broker-dealer Stanford Group Company and investment advisor Stanford Capital Management, both based in Houston. In addition, the SEC charged SIB CFO James Davis and CIO of Stanford Financial Group Laura Pendergest-Holt for their involvement in the scam.
The SEC also slammed Stanford with a second charge, relating to a mutual fund scheme. According to the complaint, Stanford Allocation Strategy was created to help SGC rake in $1.2 billion by using doctored performance reports to help sway investors. The bogus data helped Stanford’s company grow from managing $10 million in 2004 to over $1 billion.
Stanford, 58, known in the Caribbean as “Sir Allen” after being knighted there in 2006, has an estimated personal net worth of $2.2 billion, according to Forbes.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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