Stanford Blames ‘Former Disgruntled’ Workers in Probe

[Joanne98]

Feb. 13 (Bloomberg) -- R. Allen Stanford, the billionaire chairman of Houston-based investment firm Stanford Group Co., blamed “former disgruntled employees” for stoking regulatory probes into his firm.

Stanford Group is under investigation by the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, according to people familiar with the matter who declined to be identified because they didn’t want to put their jobs at risk. The agencies are examining the company’s sales of certificates of deposit issued by its Antigua-based affiliate, Stanford International Bank Ltd., and the consistent, above- average returns those investments paid, the people said.

“We are all aware that former disgruntled employees have gone to the regulators questioning our work and our processes,” Stanford said yesterday in an e-mail to staff members that was obtained by Bloomberg News. “This could have compounded an otherwise routine examination.”

Investigators from Finra visited six Stanford Group offices last month, downloaded information from computer hard drives and looked through files, the people said.

“Regulatory officers have conveyed to us these visits are part of their routine examinations,” Stanford said in his e-mail message. He repeated that assertion in a letter to clients dated Feb. 11 and obtained by Bloomberg.

“Please do not get discouraged by what you read in the press,” Allen Stanford wrote in the letter. “We are hard at work delivering on our commitment to you.”

Finra has asked former employees about the bank’s stated returns on investment, the people said.

‘Decisive Steps’

The returns were between 10.3 percent and 15.1 percent every year from 1995 until last year, according to documents and annual reports on the bank’s Web site.

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