Securities and Exchange Commission v. Stanford International Bank, et al., Case No. 3-09CV0298-L (N.D.TX.)
Litigation Release No. 20901 / February 17, 2009
Securities and Exchange Commission v. Stanford International Bank, et al., Case No. 3-09CV0298-L (N.D.TX.) SEC Obtains Temporary Restraining Order, Asset Freeze, and Other Relief Against Defendants
The United States Securities and Exchange Commission announced that on February 16, 2009, the Honorable Judge Reed O'Connor, a federal judge in the Northern District of Texas, in response to the Commission's application for emergency preliminary relief, entered a temporary restraining order against Robert Allen Stanford and three of his companies, the Antiguan-based Stanford International Bank (SIB), Houston based broker-dealer and investment adviser, Stanford Group Company (SGC) and investment adviser, Stanford Capital Management. The court's order also extends to SIB chief financial officer James Davis, and Laura Pendergest-Holt, chief investment officer of Stanford Financial Group. The temporary restraining order restrains the defendants from violating certain antifraud provisions of the federal securities laws, as well as provisions of the Investment Company and Investment Adviser Acts. Also, Judge O'Connor froze all assets of the defendants until further notice, ordered that assets outside the U.S. be returned to the court's jurisdiction, appointed a receiver to marshal the defendants' assets and granted other relief.
The SEC's complaint, filed in federal court in Dallas, alleges that the defendants have committed an $8 billion fraud and violated or aided and abetted violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act of 1940, and Section 7(d) of the Investment Company Act of 1940. The complaint alleges that acting through a network of SGC financial advisers, SIB has sold approximately $8 billion of so-called "certificates of deposit" to investors by promising improbable and unsubstantiated high interest rates, supposedly earned through its unique investment strategy, which has purportedly allowed the bank to achieve double-digit returns on its investments over the past 15 years. According to the Complaint, the defendants have misrepresented to CD purchasers that their deposits are safe, falsely claiming that the bank re-invests client funds primarily in "liquid" financial instruments (the "portfolio"); monitors the portfolio through a team of 20-plus analysts; and is subject to yearly audits by Antiguan regulators. Recently, as the market absorbed the news of Bernard Madoff's massive Ponzi scheme, SIB attempted to calm its own investors by falsely claiming the bank has no "direct or indirect" exposure to the Madoff scheme.
The Commission continues to seek, among other things, a permanent injunction, disgorgement of ill-gotten gains plus pre-judgment interest, and civil money penalties.
The Commission acknowledges the assistance and cooperation of the Financial Industry Regulatory Authority (FINRA) in connection with this matter.
THis is why I never trust a broker because you never know the SPIFF reasons behind a suggested move of funds within your asccounts
The fraudulent SAS performance was used to recruit registered investment advisers with significant books of business, who were then heavily incentivized to reallocate their clients' assets to SIB's CD program
According to the SEC's complaint, the defendants have misrepresented to CD purchasers that their deposits are safe, falsely claiming that the bank re-invests client funds primarily in "liquid" financial instruments (the portfolio); monitors the portfolio through a team of 20-plus analysts; and is subject to yearly audits by Antiguan regulators.
Mr R. Allen Stanford during the press briefing on Thursday (background charts of his contributions to the economy of Antigua and Barbuda and non-charitable organisations) (Photo: Maurice F. Merchant) Friday, November 28, 2003
ST. JOHN'S, Antigua: "When the elected leader of the opposition (Hon. Baldwin Spencer) accuses me of bribing two ministers of government for personal financial gains I must speak out. This has touched the very raw nerve of my body," said Texan billionaire R. Allen Stanford as he defended his decision to donate EC$100, 000 each to the constituency branches of ALP Parliamentarians Gaston Browne and Molwyn Joseph.
During a press briefing on Thursday, Mr. Stanford said that normally he would not take time to address the issue or give it a passing thought, but considering the direction in which the accusations of bribery are coming from he must speak out.
"These people (the opposition) their sole purpose is to stir up conflict which cause further conflict which is not in the best interest of the country. I have never in my life bribed or done anything illegal or unethical in my business endeavours much less so in Antigua and I will not and have not associated myself with people of that character," Mr. Stanford remarked.
Mr Stanford expressed confidence in the two ministers whom he said have been his friends for over eight years.
"I have known these gentlemen for a very long time. I have known Minister Molwyn Joseph for fifteen years and Minister Gaston Browne for eight years. Both of these gentlemen I have great confidence in and I have the same trust and value that I hope they have in me. I respect their ability, their honesty, their work ethics and their commitment to the people of Antigua and Barbuda because they love this country just as I do," he added.
The Texan financier said that the money that he personally gave to the two ministers ($100, 000 each) have nothing to do with a bribe or a land swap. He said it had to do with simply helping the people of Antigua and Barbuda.
The Opposition is accusing both ministers of accepting the money for negotiating a land swap in downtown St. John's between the government and Mr. Stanford. Both ministers have denied that they were negotiating any deal with the financier and have stated that the money is for constituency development and not their personal gain.
It was also disclosed that the Opposition Leader the Hon. Baldwin Spencer had discussion with Mr. Stanford last summer aboard his yacht and requested a sizeable contribution to support his quest for power. Mr. Stanford was unwilling to disclose the figure, but Planning Minister Gaston Browne disclosed the figure as US$2 million dollars.
During the Press Conference Mr. Stanford surprised the audience by donated once again to the ministers a further $200, 000 towards their constituency projects.
"I am trying to be a person that people hopefully think I should be but more importantly a person that I really am and not come across as a person who is angry. This has touched the very raw nerve of my body, but I have very thick skin. I am going to continue supporting charitable causes for the better lives of the people of this country at the lower part of the social and economic ladder and to that end I am going to support you Ministers Browne and Joseph and to Team City West and St. Mary's North Constituency Branches I have an additional $200, 000 each to donate," Mr. Stanford declared.
The Texan who is a citizen of Antigua and Barbuda and currently constructing a home on one of the country's offshore islands, said that he is not ashamed but very proud of everything he has done in the country. "Where others have talked and made idle promises, I have delivered. I have invested in this country," he said passionately.
Mr. Stanford also unveiled a list of the contributions he has made to charitable organisations for this year totalling $4,064,942.81. These include contributions to the West Indies Cricket Board, the Carnival Development Committee, Her Majesty's Prison, the Christ the King High School, Sailing Week and the Commissioner of Police.
In addition it was disclosed that so far for 2003 he has invested in the economy of Antigua and Barbuda $249,642,000. Salaries paid so far amounted to $41,526,000, Stanford Development Company Projects $142,992,000, and payments to sub-contractors for Antigua-based projects $65,124,000.
Mr. Stanford is the owner of a number of financial institutions in Antigua and Barbuda as well as the Antigua based airline Caribbean Star. He also owns Caribbean Sun Airlines.
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