SEC Suspected for 12 Years That Stanford Was Running Ponzi Scheme
Billionaire Allen Stanford made national headlines last year when he was charged by the Securities and Exchange Commission with perpetrating a $7 billion Ponzi scheme involving fraudulent certificates of deposit supposedly sold by an offshore bank.
Want even more astonishing news? An internal review panel recently disclosed that the SEC suspected Stanford was running a Ponzi scheme 12 years before action was taken to stop the fraud.
Despite suspicions dating back to 1997, “no meaningful effort was made by [the SEC enforcement division] to investigate the potential fraud, or to bring an action or to attempt to stop it, until late 2005,” according to the Inspector General’s report. By letting Stanford stay in business, additional investor losses were incurred.
According to the report, a midlevel SEC manager conducted a routine exam of Stanford’s business, and concluded that the claims he was making to customers were “absolutely ludicrous” and urged the SEC to open a formal investigation. The SEC did so eight months later, asking Stanford to provide documents. Stanford refused, and the agency dropped the matter.
The message is clear: Do not assume that others will protect you from investment fraud. It’s your money and your life — and therefore you are ultimately responsible for protecting yourself.
To learn how you can protect yourself, go to RicEdelman.com and download my special report on the warning signs of crooked advisors, or ask your Edelman planner for a copy.