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Stanford Financial's CDs Probed: Report

Stanford Financial Group's certificate of deposits have attracted the attention of federal and state regulators who are investigating the investment strategies that allow the firm to offer interest rates more than twice the market average, BusinessWeek reported.

Stanford says it generates the high returns by investing CD money in stocks, real estate, hedge funds and precious metals. The Houston-based firm says it follows industry standards for marketing and sales and that the regulatory scrutiny is part of "routine examinations," according to BusinessWeek.

Privately held Stanford, founded in 1932, says on its Web site that its investment goal is to "provide consistent returns regardless of market volatility." The company says its assets under management or advisement top $50 billion.

The Securities & Exchange Commission, the Florida Office of Financial Regulation, and the Financial Industry Regulatory Authority are all investigating Stanford Financial, focusing on the high-yield CDs and how the company could afford to offer employees large bonuses and other perks such as luxury cars and vacations, BusinessWeek reported, citing people close to the investigations.
Hall is the editor of Previously, he served as deputy editor and chief innovation officer at The Orange County Register and as a news manager at Bloomberg News in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at The Journal-Gazette in Fort Wayne, Ind. His work also has been published in a variety of newspapers including The Wall Street Journal, The New York Times and International Herald Tribune. Hall received a bachelor�s degree in journalism and political science from The Ohio State University and has taken graduate management science courses at Boston University.

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