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

10 Dumbest Things on Wall Street in 2009 (Part 1)

9. Knight Flight

( 2/20/09)

It turns out Wall Street has its own version of The Dark Knight.

Securities and Exchange Commission agents raided the Houston office of Sir Robert Allen Stanford on Tuesday, charging that the knighted Texas billionaire fooled clients into pouring money into three of his companies, with bogus promises of outsized returns. The SEC alleges that Stanford orchestrated a "massive" scheme revolving around $8 billion worth of certificates of deposit that promised "improbably and unsubstantiated high interest rates."

Stanford, who was served with papers by the FBI in Virginia on Thursday, 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 Stanford fabricated historical return data over the past 15 years. For example, Stanford's fund reported identical returns in 1995 and 1996 of exactly 15.71%, a statistical impossibility, according to the government's complaint.

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

Stanford has dual citizenship in the U.S. as well as Antigua and Barbuda, but lives on St. Croix in the U.S. Virgin Islands, according to his bio on Stanford Financial's Web site. He is the first American to have been knighted by Antigua and Barbuda, whose official head of state is Britain's Queen Elizabeth II, which took place at the independent country's Silver Jubilee festival in November 2006, the bio says.

And oh what a knight he is! Just like fellow alleged fraudster Sir Bernard Madoff I, now under "pent"-house arrest in his castle in the sky, Stanford defrauded friends and family out of millions while living like a king on their money.

Linda Chatman Thomsen, director of the SEC's enforcement division, said the agency is "moving quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors."

You've gotta be kidding us, Linda. Stanford was operating a multibillion dollar scam for more than a decade, and now the SEC is snapping into action?

It's no wonder the Dark Knight Stanford was able to elude justice for so long. He was dealing with a bunch of Jokers.

Five Dumbest Final Thoughts -- Holy Moly, Batman! The SEC sure looked foolish between Madoff and Stanford.
2 of 5

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
SFD $0.00 0.00%
AIG $58.31 -1.90%
BAC $15.62 -2.00%
GS $180.28 -2.60%
TSN $42.23 -1.10%

Markets

Chart of I:DJI
DOW 16,131.84 -242.92 -1.48%
S&P 500 1,925.30 -25.83 -1.32%
NASDAQ 4,693.3540 -40.1430 -0.85%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs