Could regulators have jumped faster on Stanford CD sales?
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U.S. regulators seem to have known in 2007 that something was amiss with Stanford Group Co.’s claims about the uninsured bank certificates of deposit it was selling.
Did another mega-scam slip through their net?
From Bloomberg News:
U.S. brokerage regulators fined R. Allen Stanford’s firm more than a year ago for misleading investors while selling certificates of deposit, raising new questions about watchdogs already under scrutiny for missing Bernard Madoff’s alleged $50-billion Ponzi scheme. Stanford Group Co. was fined $10,000 by the Financial Industry Regulatory Authority in November 2007 for distributing marketing material that ‘failed to present fair and balanced treatment’ of the risks associated with CDs. The Securities and Exchange Commission yesterday filed a civil lawsuit calling the sales by the Houston-based firm a ‘massive, ongoing fraud.’ ‘From what we know, the problem that led to the fine was a red flag,’ said Robert Hillman, a securities law professor at UC Davis. ‘If you have a red flag of this nature, then you have to do something more than simply levy a fine and close the file.’ Finra spokeswoman Nancy Condon and SEC spokesman Kevin Callahan had no immediate comment.
Blogger Felix Salmon at portfolio.com notes that various reports have had the SEC investigating Stanford for months, if not longer.
Bloomberg reported in July that the SEC was probing Stanford’s CD sales.
The SEC’s outgoing enforcement chief, Linda Chatman Thomsen, said on Tuesday that the agency was moving ‘quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors.’
Decisively, maybe. But quickly?
-- Tom Petruno
R. Allen Stanford. Credit: Lefteris Pitarakis / Associated Press