Sir Allen Stanford’s Financial Empire Investigated


cricket

The Stanford Financial Group’s business activities are being investigated by the US authorities. The financial group is owned by Sir Allen Stanford, a Texas Billionaire and an Antiguan Knight. Over the last few years Sir Allen Stanford’s name became a household word to all West Indians and the cricketing world because of  the huge prizes he offered to mainly West Indian Cricketers. Now his financial empire is under scrutiny for offering rates of returns to investors that seemed too good to be true just as Sir Allen’s cricket prizes were.

I have a hunch that this may be the end of the lucrative side of the Stanford 20Twenty Tournament in the West Indies and there is much speculation about the cancellation of the US$20 million dollar England/West Indies 20/20 for 20 Tournament. The West Indies cricket team easily won the first match of the 20/20 for 20 Tournament with each West Indian player pocketing one million dollars US while the wife of an English cricketer won the privilege to sit on the billionaire’s lap. Many people said this prize (money) was too good to be true and it was poisoning cricket but nobody died. Sir Allen also added several novelties to the game such as  interviews with players on the field and the Super Over Tie -Breaker. The one missing attraction to the Stanford 20/20 matches was cheerleaders, Indian Premier League style.  Some cricket traditionalists were upset that Stanford, an American, threatened to take the game away from its non-American roots but now they may not have to worry.

Both West Indian and English Cricketers are concerned they may not have another shot at the multimillion dollar prize again but world financial conditions and the FBI might determine what happens next. Cricket needs a shot in the arm again and if Sir Allen Stanford cannot do it then maybe a consortium of business men can. Stanford showed the world what was possible with cricket but he may not be able to do it if he is shackled for his past.

UPDATE – 17-02-2009 :

Washington, D.C., Feb. 17, 2009 – The Securities and Exchange Commission today charged Robert Allen Stanford and three of his companies for orchestrating a fraudulent, multi-billion dollar investment scheme centering on an $8 billion CD program.

Stanford’s companies include Antiguan-based Stanford International Bank (SIB), Houston-based broker-dealer and investment adviser Stanford Group Company (SGC), and investment adviser Stanford Capital Management. The SEC also charged SIB chief financial officer James Davis as well as Laura Pendergest-Holt, chief investment officer of Stanford Financial Group (SFG), in the enforcement action. ~ The Wall Street Journal

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16 thoughts on “Sir Allen Stanford’s Financial Empire Investigated

  1. I don’t think this will affect 20/20! Stanford’s already contacting his employees and letting them know “You, your managers and I, will fight with every breath to continue to uphold our good name and continue the legacy we have built together. On the issue of Stanford International Bank, I want to be very clear. SIB remains a strong institution, and even without the benefit of billions in US taxpayer’s dollars we are taking a number of decisive steps to reinforce our financial strength.” Good news since 20/20 is so awesome!

  2. Cricketmaestro:

    The securities business is based on trust. the people invested with Stanford are only protected by “Sir Allen”‘s word.

    If I were an investor, I would want to hear about how the bank is cooperating with the regulators, not trying to “fight with every breath”.

    That having been said, that statement looks an awful lot like what Ken Lay was saying to his employees and investors in the Summer of ’01.

  3. As one who was employed by Allan Stanford for 8 years, I found him to be generous to his employees and provided the highest paying jobs in Antigua. It seems the SEC wants to investigate him because he pays 4 or 5 % on cds. He has some of the most qualified people you can find to manage his investments and it is no surprise that he can pay more than US banks that are cash cows for the executives. Perhaps they should investigate these banks that charge 22% interest on credit cards only pay 3/4% or less interest on saving accounts. It is no wonder people don’t save.

  4. As a former Stanford employee, I have seen a lot of half-truths and some outright lies thrown around regarding Stanford International Bank (SIB). There have been many facts that have not been reported that might interest investors, the public in general, and particularly the media, which seem to rely on bloggers for their sources without doing any fact checking.

    Over the last 18 months, there have been unprecedented challenges which have confronted the global financial industry and have led to heightened scrutiny by regulatory bodies, the public and the media. Although Stanford Financial Group has not been the beneficiary of any government bailout money, they are not immune from this crisis; however any comparisons to recently defaulted institutions and scandals are not relevant to the organization and are a disservice to Stanford employees and clients worldwide.

    One analyst’s opinion regarding Stanford International Bank has been picked up by numerous blogs and reputable news outlets and printed “as fact.” These facts need to be known: Stanford International Bank was able to show a positive return for doing what U.S, banks did NOT do: –SIB does not make loans, they have no loan loss reserves, they took no markdowns to capital and had no exposure to subprime. If U.S. Banks had followed this strategy — chances are they might have shown positive returns.

    Has anyone bothered to check out the Analyst — one Alex Dalmady — who is he, what is his track record? It is easy to point fingers and make broad statements — what expertise does this guy have? I would hope the more reputable outlets did this homework, but they seem to have picked his words up verbatim and did no “fact checking” on the source of all of this at all.

    The media has a responsibility to report accurately and balanced — that is not apparent in Stanford’s case. He may be flamboyant, but that is not a crime. Misleading and scaring thousands of investors is.

    And let’s not forget that ALL of this started with two disgruntled employees who owe Stanford a lot of money (Bloomberg link with what they actually owe: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aNO2xKLg68_0) running to regulators accusing Stanford when they found out Stanford expected them to pay back what they owed. To date, there has been NO evidence of wrongdoing on the part of Stanford, but evidence of illegal selling practices by the two employees has been uncovered and turned over to regulators. Why has not one reputable media outlet reported this??

    Stanford International Bank has NEVER failed to make an interest payment or pay funds at maturity in the nearly 25 years of its history. That is 25 YEARS, not weeks or months. Also, while not obligated to, this Bank has always tried to help the customers who needed early withdrawals. This Bank has suspended THE Privilege of early withdrawals to ensure the protection of its entire depositor base. The media hype and continued repetition of half truths is only causing heightened anxiety, and this step has been taken in light of this barrage of negative and misleading statements.

    SIB structures, operations and higher returns are no different than other private international banks except that SIB has narrowed its products to CDs and deposit accounts, as well as ancillary products like credit cards and loans to existing clients. The rates for a 5-year jumbo CD are from 1 1/3% to 6 7/8% and are comparable to other international institutions. This information is verifiable on bankrate.com.

    This analyst states that it is near to impossible for SIB to show a positive return — implying there must be fraud for this to occur. Plenty of financial investment vehicles had positive returns — including more than 1,600 hedge funds. The characterization that positive must be fraudlent is simply false and sensationalism.

    Are we going to launch investigations of all firms who did NOT lose money for their investors last year?

    Madoff/ponzi characterization — Separately, at Stanford Group Company, clients assets are held at Pershing LLC, a subsidiary of Bank of New York Mellon—one of the largest custodian organizations in the world. Clients’ brokerage account assets are insured and segregated to assure return of their assets in the event of any catastrophic events like the ones that have occurred to world class financial institutions in the last two years. Madoff was his own custodian…..more sensationalism. Report the truth…report the Pershing relationship. There has not been one fact proving that Stanford International Bank’s custodian relationships are not holding sigificant assets or that their independent money managers are not managing significant amounts for the bank.

    Federal Agencies are “investigating” Stanford — regulators are a reality for any U.S. Broker/Dealer….the SEC and Finra were in Stanford offices as part of a routine examination. No one has confirmed or advised an “investigation is ongoing. There was an article in the New York Times earlier this week with headline “Hundreds of Regulators descend on Citi…..” Regulators are feeling the sting from their testimony to Congress, and are responding with more oversight. Stanford has no problem with this and has track record of full cooperation with regulators over the years.

    Since the first Stanford Company’s founding during the Great Depression, the Stanford Financial Group has grown into a full-service portfolio of companies servicing individuals and institutions. Stanford Financial Group is a privately held global network of independent, affiliated financial services companies including Stanford Group Company, Stanford International Bank and Stanford Trust.

    The Stanford International Bank (SIB) is but one aspect of the overall company portfolio and operates in St. John in the Caribbean Island of Antigua and Barbuda. The Bank has a prudent investment approach that it has followed for over 20 years and has over 30,000 clients in over 90 countries. It has stringent know-your customer/anti-money laundering policies and procedures and terrorist financing tracking. SIB remains a strong institution, and even without the benefit of billions in US taxpayer’s dollars SIB is taking a number of decisive steps to reinforce SIB financial strength to keep the capital base intact to protect SIB depositors.

    Stanford International Bank has used the same auditing firm for a number of years. Once the external bank auditors are selected by the Board of Directors they must be expressly approved by regulatory agencies. The regulatory framework follows international standards set forth by Basel I and II. For the record, Basel I and Basel II are the highest standards in the industry.

  5. Davis:

    “If you or anyone can explain cricket to me in 5 minutes or less, I would be most appreciative.”

    You wouldn’t understand; it takes patience!

  6. Washington, D.C., Feb. 17, 2009 – The Securities and Exchange Commission today charged Robert Allen Stanford and three of his companies for orchestrating a fraudulent, multi-billion dollar investment scheme centering on an $8 billion CD program.

    Stanford’s companies include Antiguan-based Stanford International Bank (SIB), Houston-based broker-dealer and investment adviser Stanford Group Company (SGC), and investment adviser Stanford Capital Management. The SEC also charged SIB chief financial officer James Davis as well as Laura Pendergest-Holt, chief investment officer of Stanford Financial Group (SFG), in the enforcement action. The Wall Street Journal

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