Ex-Stanford Group Advisers Sued by Receiver Over Commissions

Ex-Stanford Group Advisers Sued by Receiver Over Commissions - 4/16/2009

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Ex-Stanford Group Advisers Sued by Receiver Over Commissions
Laurel Brubaker Calkins

Bloomberg. April 16, 2009
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EXCERPT: Sixty-six former Stanford Group Co. financial advisers were sued by a court-appointed receiver seeking to recover $40 million in compensation related to sales of Antiguan certificates of deposit. The U.S. Securities and Exchange Commission sued Texas billionaire R. Allen Stanford, two associates and three affiliated companies on allegations they ran a “massive ongoing fraud” involving high-yield CDs sold by Antigua-based Stanford International Bank. The financial advisers were added yesterday as defendants to the SEC suit in federal court in Dallas, according to a statement by Stanford’s receiver, Ralph Janvey. “The brokerage services performed by the financial advisors in exchange for the compensation payments were not legitimate and did not confer any benefit on their customers,” Janvey, a Dallas lawyer, said in the statement posted on his Web site. “The financial advisors have no rightful ownership interest that could justify their retaining possession of the funds.” Janvey said each of the 66 targeted former Stanford brokers received at least $200,000 in CD commissions during the past two years. “This lawsuit changes everything,” said Houston lawyer Michael Stanley, who represents about a third of the brokers named in the receiver’s suit. “These are the people who’ve been trying to intervene in the SEC case. Now, they’ll be able to take a look at the evidence of what Janvey says the fraud is.” Ponzi Scheme U.S. regulators accuse Stanford of skimming as much as $1.6 billion through a Ponzi scheme, in which early investors were repaid with funds taken from later participants. Stanford denies the allegation and is fighting a court order that froze all of Stanford’s personal and corporate assets and placed them under Janvey’s control. Stanley denies the financial advisers were involved in any fraudulent activity.

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