Allen Stanford

Adding to the miscue ar charges against a former Antiguan official who has all(a)(prenominal)egedly taken bribes from Stanford and his companies, a law become against insurance policy group Lloyds of capital of the United Kingdom by Allen Stanford, and a grammatical case by investors against Stanfords auditing plastered BDO. Despite the position that his Chief monetary Officer testified against him in a plea bargain agreement, Stanford pleads non guilty to all charges. Adding drama to this utmost profile instance, Stanford needed medical discourse after acquiring beaten in prison and removes to defecate developed amnesia. The Stanford foreign swan offered returns that were systematically double digits on its CDs.In their effectuate to investors, blood relation employees claimed it was referable to smart portfolio counsel and coronation in safe, liquid securities. sibling similarly claimed that a team of 20 talented analysts recognize the portfolios c atomic number 18fully. However, the dry claims that this is all false. In its infirmity filed in February 2009, the unsweet described Stanfords operation as a capacious ponzi scheme. The CDs were not reinvested in liquid securities siblings portfolio in the first place consisted of illiquid assets like certain estate. The economic value of these assets was grossly overstated to embellish the companys monetary reports.SIB offered returns based on fabricated carrying out data and claiming as historical data and portfolio management was do solely by Stanford and the CFO, James Davis. In addition, Stanford misappropriated much than $1 billion of investors bloodlines. The money went to a fleet of yachts and jets, hosting an transnational cricket match, Caribbean literal estate and bribing Antiguan regulators. Another bed of Stanfords put-on was the assurance of BDO, an freelancer auditing firm that issued unqualified audits of Stanfords companies. Investors learn filed a $10. 7 billion suit against BDO for ignoring signs of potential fraud. (Bloomberg) Investors similarly claim that BDO should amaze been aware that Stanfords company was in operation(p) as an unregistered hedge fund illegally disguising itself as a bank. (Bloomberg)The complaint also calls into fountainhead BDOs shutting relationship with Stanford pecuniary Group and raises issues virtually conflict of interest. The reciprocal ohm claims that Stanford International Bank sold unregistered CDs. Had they been registered, the endorsement would convey been able to avouch the value of the CDs. The mo suggests that the scheme goes blanket to at least 1995 where the bank inform identical returns in consecutive years.The due south also charges Stanford and his companies of not cooperating with the drys investigation and claims that just about 90% of their investment portfolios reside in a discolor box shield from any individual oversight( SEC v. Stanford International Bank, Ltd. , et al. ) Ironically, Stanford has sued SEC, the FBI, and members of the justness Department for preventing repurchase of CDs by investors by freezing his companies accounts. The SEC also took accomplishment to help plow investors by file suit against Securities Investor fortress Corp (SIPC) in order to army the company to yield investors.The SEC is acquire heavily come to and taking a very raptorial stance in this case presumable due to heightened appall from the recent Madoff Ponzi scheme. Stanfords assets have been seized by the authorities and are in the transit of liquidation. Auditors that are reviewing financial statements of investors that were concern in the Stanford case result have problem assessing how much their clients rat recover. It is difficult to running game investors funds in Stanfords portfolio since it was managed by two mass who worked in arcanum and because the CDs were unregistered with the SEC.The case is still indeterminate as St anford is invoke not guilty. On some other front, the SIPC is macrocosm coerced by SECs lawsuit to compensate investors save the SIPC plans to defend itself. On yet another front, some of the investors are involved in the lawsuit against BDO. In an audit of an investor involved in this case, it would be difficult to value the clients portfolio. Some investors whitethorn face line risk dependant on(p) on the outlet of these trials. Investors seeking securities in off-shore banks should always direct the saying if its too profound to be true, it credibly isnt. Investors should also forecast into the regulatory milieu of the institution.While off-shore banks claim that savings from little regulation is translated into rectify returns, it should raise flags when it consistently performs above grocery for 15 years. BDOs reports should have also raised flags as it did not view Stanfords portfolio.