Allegations against Stanford Group, among others, suggest this will be a fraud-infested downturn
HOUSTON has not seen anything like it since the collapse of Enron. On Tuesday February 17th federal agents swooped on Sir Allen Stanford’s financial group, seizing mountains of documents, and a judge placed it in the hands of a receiver. The obvious parallel, however, was not the defunct energy firm but Bernard Madoff. Charges filed by the Securities and Exchange Commission (SEC) portray the flamboyant Sir Allen as the ponzi-master’s offshore equivalent, perpetrating a fraud of “shocking magnitude” based on “false promises” and fabricated performance data, primarily through his Antigua-based bank.
The central allegation is that Stanford International Bank hoodwinked investors over the safety and liquidity of uninsured certificates of deposit (CDs). It took in some $8 billion, consistently offering rates well above those of big banks—sometimes more than twice as high. Despite assurances that the money was going into liquid securities, much of it was apparently ploughed into sticky assets such as property and private equity. ...
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[Source: The Economist: News analysis - Posted by FreeAutoBlogger]
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