Stanford

The SEC today concluded that certain individuals who invested money through the Stanford Group Company – a U.S. broker-dealer “owned and used by Allen Stanford to perpetrate a massive Ponzi scheme,” according to the SEC – are entitled to the protections of the Securities Investor Protection Act of 1970 (SIPA). 

Late last week, while the Securities and Exchange Commission was getting ready to go after Goldman, it released a report by the SEC Office of the Inspector General that was highly critical of the SEC's actions in connection with R. Allen Stanford's alleged Ponzi scheme – a report highly reminiscent of the criticisms the SEC faced following its failure to find the Madoff fraud on a timely basis. 

The failures of the Securities and Exchange Commission in the Madoff case have been well discussed here and, it seems, almost everywhere else. Now, the SEC Inspector General is expected to criticize the SEC when he releases a report soon examining the SEC's actions in the case involving R. Allen Stanford, who is awaiting trial in Texas. 

There’s another online article to which we would like to point you this morning. It’s “A Preview of Trials and Tribulations in 2010,” by Peter J. Henning, a law professor who specializes in white collar crime issues and writes about them for the Times. In his piece, he discusses the Galleon insider trading case, involving billionaire hedge fund manager Raj Rajaratnam; the alleged Ponzi scheme case involving R.

The federal judge overseeing the criminal fraud trial of billionaire R. Allen Stanford has ruled that the trial will begin in January 2011, somewhat earlier than the defense had hoped. That means, however, that we have some time to parse the issues here. For now, you might want to review a chronology prepared by Reuters, available

A Special Review Committee of the Financial Industry Regulatory Authority, Inc. (“FINRA”) Board of Governors today issued a report that is destined, like the OIG review of the Securities and Exchange Commission, to be characterized as “scathing.”  

My mother used to say that if she had been forced to make a choice, she would rather have had her central air conditioning than the furniture in her house. And she was living on Long Island at the time.

Another report on the securities law class action suits filed during the first half of this year has just come out, complementing the one we talked about last week from Stanford Law School Securities Class Action Clearinghouse in cooperation with Cornerstone Research. See http://www.financialfraudlaw.com/content/two-thirds-defendants-securities-law-suits-now-are-financial-institutions-report-finds.

A federal district court judge in Houston today revoked a magistrate judge’s order granting alleged Ponzi schemer R. Allen Stanford release on bail. U.S. District Judge David Hittner declared that, “[i]n total, the evidence proffered by the government is sufficient to weigh in favor of detention.”

It is not certain whether Stanford’s counsel will appeal the decision.

The federal district court judge overseeing the criminal proceedings brought against Texas financier R. Allen Stanford is expected to decide later today whether to revoke Stanford’s $500,000 bond, which would send him immediately to jail pending trial. We will post news about the decision as soon as it is available.