Stanford International Bank, Ltd. (Stanford Group Company, Stanford Capital Management)
MURRAY, FRANK & SAILER LLP is investigating claims against Stanford International Bank, Ltd., Stanford Group Company, Stanford Capital Management ("Stanford"), Stanford's CEO (R. Allen Stanford), and CFO (James M. Davis), among others, on behalf of investors who: (i) purchased certificates of deposits ("CDs") from Stanford, or (ii) purchased securities in Stanford's proprietary mutual fund wrap program, called Stanford Allocation Strategy ("SAS").
On February 16, 2009, the Securities and Exchange Commission ("SEC") effectively shut down the operations of Stanford. The SEC obtained a court order that restrained the company and its officers from any further fraudulent activity, froze all of Stanford's assets and placed the company in control of a court-appointed receiver. According to the SEC, investors who purchased CDs and SAS from Stanford may have lost part or all of their investments as billions of dollars are currently unaccounted for.
Certificates of Deposit Fraud
According to the SEC, Stanford sold approximately $8 billion of CDs by promising exceptionally high interest rates. In selling its CDs, Stanford claimed in its promotional material and public reports that its unique investment strategy allowed it to achieve double-digit returns on its investments over the prior 15 years, allowing it to offer high yields to CD purchasers. Stanford misrepresented to CD purchasers that their deposits were safe, claiming that Stanford: (i) re-invested client funds primarily in "liquid" financial instruments (the "Portfolio"); (ii) monitored the Portfolio through a team of 20-plus analysts; and (iii) was subject to yearly audits by Antiguan regulators.
Stanford's assurances were materially false and misleading in that: (a) the Portfolio was not invested in liquid financial instruments or allocated in the manner described in its promotional material and public reports, but instead was placed in illiquid investments, such as real estate and private equity; (b) the vast majority of the Portfolio was not monitored by a team of analysts, but rather two people; and (c) the Antiguan regulators at issue did not audit the Portfolio or verify the assets that Stanford claimed in its financial statements. Also, Stanford had invested a portion of the Portfolio with Bernard Madoff Securities, contrary to its public statements on this subject.
Mutual Fund Wrap Program Fraud
Similarly, Stanford was able to sell over $1 billion of SAS to investors by providing materially false and misleading historical performance data. In selling SAS, Stanford materially mislead investors by claiming that SAS accounts from 1999-2004 outperformed the S&P 500 by an average of approximately 13%. In fact, these results were fictional, or "back-tested," numbers that did not reflect results from actual trading. Stanford, with the benefit of hindsight, picked mutual funds that performed extremely well during 1999-2004, and presented the back-tested performance of those top-performing funds to potential clients as if they were actual returns earned by SAS. Further, Stanford touted "actual" model SAS performance results for later years that were substantially inflated over true SAS investment returns.
If you purchased CDs or SAS from Stanford International Bank, or an affiliated entity, and have questions concerning this notice or your rights, please contact us by phone or email.
MURRAY, FRANK & SAILER LLP