This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Stanford Financial Accused of 'Massive' Fraud

Updated from 1:37 p.m. EST

A knighted Texas billionaire tricked clients into pouring money into three of his companies with false promises of outsized returns, according to fraud charges filed Tuesday by the Securities and Exchange Commission.

The SEC alleges that Sir Robert Allen Stanford orchestrated a "massive" scheme, centering around $8 billion worth of certificates of deposit that promised "improbably and unsubstantiated high interest rates." In addition to Stanford, the SEC also charged James Davis, CFO of Stanford International Bank, and Laura Pendergest-Holt, chief investment officer of Stanford Financial Group.

Stanford offered those products through an offshore firm, Stanford International Bank, claiming that the high rates were achieved through returns from his Houston-based broker-dealer firm, Stanford Group Co. However, the SEC says that Sir Allen Stanford fabricated historical return data over the past 15 years. A third company, investment adviser Stanford Capital Management, is also named in the charges.

The SEC also accuses Stanford Group Co. of conning registered investment advisers into investing in a proprietary mutual fund wrap program called Stanford Allocation Strategy based on fake performance data. Those advisers forked over $1.2 billion worth of clients' money, according to the SEC.

David Marder, a partner with Robins Kaplan Miller & Ciresi, says complicated, unrecognized products can often be red flags.

"There ain't nothing new under the sun," says Marder. "If you're investing in stocks, you're investing in stocks; if you're investing in options, you're investing in options; if you're investing in bonds you're investing in bonds. So if you're investing in something no one's ever heard of before, it's probably not legit."
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $112.76 -0.47%
FB $89.43 -1.74%
GOOG $618.25 -1.92%
TSLA $249.06 0.23%
YHOO $32.25 -2.70%

Markets

Chart of I:DJI
DOW 16,528.03 -114.98 -0.69%
S&P 500 1,972.18 -16.69 -0.84%
NASDAQ 4,776.5080 -51.8170 -1.07%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs