The OIG investigation found that since 1997 the SEC's Fort Worth office was aware that Robert Allen Stanford was likely operating a Ponzi scheme. This conclusion was made 2 years after Stanford Group Company (SGC), Stanford's investment advisers, registered with the SEC in 1995. Fort Worth examiners conducted investigations of Stanford in 1997, 1998, 2002, and 2004, concluding from each investigation that Stanford's CDs were likely a Ponzi scheme or a similar fraudulent scheme. Despite the examiners' referral of their serious concern that SGC was part of a Ponzi scheme, the Enforcement staff did not open a matter under inquiry ("MUI") into the Stanford case until 8 months later and did so only after learning that another Federal agency suspected Stanford of money laundering. The OIG did not find that the reluctance of the Fort Worth Enforcement group to investigate or recommend an action against Stanford was related to any improper professional, social, or financial relationship by any former or current SEC employee. There was evidence, however, that SEC-wide institutional influence did factor into the repeated decisions not to undertake a full and thorough investigation of Stanford. Senior Fort Worth officials perceived that they were being judged by the number of cases they brought, so they communicated to the Enforcement staff that novel or complex cases that would involve significant time and costs were to have low priority.
Investigation of the SEC's Response to Concerns Regarding Robert Allen Stanford's Alleged Ponzi Scheme
NCJ Number
235944
Date Published
March 2010
Length
159 pages
Annotation
This report by the U.S. Securities and Exchange Commission's Office of Inspector General (OIG) focused on any indications that prior to 2006 the Securities and Exchange Commission (SEC) had received any information or complaints that Robert Allen Stanford was operating a Ponzi scheme or other similar fraud, as well as what action, if any, the SEC took in response.
Abstract