SEC alerted (by whistleblower) about Stanford in 2003

[sabra]

Source: FT

A whistleblower contacted US regulators more than five years ago with allegations that Sir Allen Stanford’s businesses were involved in an “illegal Ponzi scheme”, the Financial Times has learnt, raising new questions about why authorities waited until last week to shut down the alleged $8bn fraud.

Leyla Basagoitia, a former Stanford employee, raised a series of red flags about the tycoon’s empire in a 2003 employment dispute with her company at a tribunal run by the finance industry’s self-regulatory body. Ms Basagoitia also alerted the US Securities and Exchange Commission at about the same time, her lawyer said, echoing criticisms the agency ignored early warnings about the alleged $50bn Ponzi scheme run by Bernard Madoff.

Meanwhile, Laura Pendergest-Holt, chief investment officer of Stanford Financial Group, was arrested on Thursday by FBI agents and charged with obstruction. The complaint alleges she made misrepresenations to the US Securities and Exchange Commission “in order to obstruct its investigation”.

Ms Basagoitia told an arbitration panel at the National Association of Securities Dealers in October 2003 that she suspected that Stanford Group Company, one of Sir Allen’s key businesses, was “engaged in a Ponzi scheme to defraud its clients”, according to case documents seen by the FT. In 2007, the NASD became the Financial Industry Regulatory Authority, which has come under scrutiny since the Stanford allegations emerged.

Read more: http://www.ft.com/cms/s/0/148817be-043b-11de-845b-000077b07658.html?nclick_check=1

[tanyev]

1. So basically the SEC hasn't been doing diddly-squat for the last 8 years.

[sabra]

2. right - it's just a coincidence that all these scandals are coming to light after BushCo leaves town

:sarcasm: