The global financial crisis that has decimated stock portfolios and real estate has seen people flocking to safer alternatives. Among those "safer alternatives"…Bank CDs. From some unlucky Texans and others who invested in CDs with Stanford International Bank that illusion may be shattering.
The Securities Exchange Commission ("SEC") has accused Stanford International Bank and its affiliates of falsely stating in marketing materials that client funds were placed in liquid financial instruments, when in fact they were invested in private equity funds and real estate. According to various news reports, on Nov. 28, 2008 Stanford International Bank quoted a rate of 5.375 percent on a $100,000 three-year CD, compared with rates of less than 3.2 percent at American banks. The bank recently offered rates of more than 10 percent on five-year CD's, according to the complaint.
In its complaint, the SEC said it could not account for the $8 billion in assets that were housed in the Antigua bank after issuing subpoenas for records .
In the complaint, the SEC called "improbable, if not impossible" claims by the offshore bank that it paid "significantly" higher returns on its CD's because of the high quality of its investments.
In the complaint, the SEC requested that the defendants' assets be frozen and that a receiver be appointed to take control of business operations. It also requested that the assets of the bank and other offshore units be repatriated. And the agency asked that Stanford and the other named executives be required to surrender their passports.
The SEC accused Stanford Capital Management, a Houston-based investment advisory unit, of inflating the performance of its $1.2 billion-asset Stanford Allocation Strategy mutual fund in promoting it to prospective investors.
The complaint also accused the Stanford offshore banking unit and the Houston-based broker dealer of violating provisions of the Investment Company Act of 1940 in failing to register as an investment company.
How many tort victims, trial lawyers with big Texas size awards and fees and senior citizen's life savings got sucked into these CDs?
A notable Texan once said that "Structured Settlements Save The Needy From The Greedy". Whether in the form of a structured settlement annuity or a United States Treasury Bond Structured Settlement they certainly are one way to go for tort victims and their attorneys. But How Do We Save The Greedy From Themselves?
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