SEC v. Robert Allen Stanford; Stanford International Bank; Stanford Group Company; Stanford Capital Management; James Davis; and Laura Pendergest-Holt, No. LR-20901, Northern District of Texas (Feb. 17, 2009) — Press Release
raw: Stanford International Bank, et al.
Stanford International Bank, et al., No. LR-20901 (Feb. 17, 2009)
Robert Allen Stanford and his affiliates defrauded investors of approximately $8 billion by selling fraudulent certificates of deposit with false claims of high, guaranteed returns and safe, liquid investments, leading to a federal asset freeze, receiver appointment, and SEC charges for securities fraud and investment adviser violations.
The SEC alleged that Robert Allen Stanford, Stanford International Bank, Stanford Group Company, Stanford Capital Management, CFO James Davis, and CIO Laura Pendergest-Holt orchestrated an $8 billion fraud by selling fraudulent certificates of deposit promising unrealistic double-digit returns. The defendants falsely claimed the investments were backed by a liquid, audited portfolio and had no exposure to Bernard Madoff’s scheme, violating Sections 17(a) of the Securities Act, 10(b) and Rule 10b-5 of the Exchange Act, and Sections 206(1), 206(2) of the Advisers Act. On February 16, 2009, a federal judge issued a temporary restraining order, froze all domestic and foreign assets, appointed a receiver, and the SEC seeks disgorgement, interest, and civil penalties.
Robert Allen Stanford and his affiliated entities—Stanford International Bank, Stanford Group Company, and Stanford Capital Management—along with key executives James Davis and Laura Pendergest-Holt, orchestrated an $8 billion fraud by selling fraudulent certificates of deposit to investors with promises of unusually high, guaranteed returns. The defendants falsely claimed the investments were secure, backed by a diversified portfolio of liquid assets, monitored by over 20 analysts, and subject to annual audits by Antiguan regulators, when in reality the funds were misappropriated. In an attempt to quell investor panic following the Madoff scandal, they falsely denied any connection to Madoff’s Ponzi scheme. On February 16, 2009, the U.S. Securities and Exchange Commission secured a temporary restraining order from a federal judge in Texas, freezing all assets of the defendants—including those held overseas—and appointing a receiver to take control and marshal the assets. The SEC charged the defendants with violating Section 17(a) of the Securities Act of 1933, Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission is seeking a permanent injunction, disgorgement of all ill-gotten gains with pre-judgment interest, and civil monetary penalties. FINRA provided critical assistance in uncovering the fraud, highlighting the coordinated regulatory response to this massive financial deception.
Exhibits & Attached Documents (2)
Extracted insights
- $8.00B $8 billion ≥$1B
- person bernard madoff
- organization Financial Industry Regulatory Authority
- person James Davis
- person Laura Pendergest-Holt
- person robert allen stanford
- agency Securities and Exchange Commission
- company Stanford Capital Management
- company stanford group company
- company Stanford International Bank
- U.S. Securities and Exchange Commission obtained temporary restraining order against Stanford International Bank and other defendants in Case No. 3-09CV0298-L (N.D.TX.)
- Judge Reed O'Connor entered temporary restraining order on February 16, 2009, against Stanford International Bank and other defendants
U.S. SECURITIES AND EXCHANGE COMMISSION 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. SEC ComplaintSEC First Amended Complaint in this matterMemorandum of Law
U.S. SECURITIES AND EXCHANGE COMMISSION 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. SEC ComplaintSEC First Amended Complaint in this matterMemorandum of Law