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New SEC Black Eye: Missed Clues in Stanford Ponzi

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Apr 29, 2010 10:53 am

The SEC’s Own Report Says that It Missed Tips and Clues in a Giant Ponzi

My mother is an old woman with more than 75 years of age and she has all her money my father inherited to her for his life work in CDs of Stanford Bank. This is the only money my mother has, and it is necessary for my mother, my sisters and me for living. My mother put it in the United States because of the bad situation in Mexico and because the most important thing is to look for security. …I am an accountant by profession and work for a large bank in Mexico. I know some banking regulations of my country that are very different from practices in Stanford Bank and for that reason I am very nervous. Please look at this bank and investigate if everything is honest and correct. There are many investors from Mexico in this bank. My questions and doubts are listed here...

On December 5, 2002, the Securities and Exchange Commission (SEC) got a letter (excerpt above) from the worried daughter of an investor in Sir Allen Stanford's certificates of deposit.  When you read the fuller version of the letter, you will likely shake your head in amazement, if not disgust. 

Thankfully, the writer communicated her concerns to the SEC. Thankfully, the communication was transmitted some eight years ago in 2002 -- just in time for the SEC to decisively act and prevent Stanfrod from devastating many public investors.  Thankfully, Wall Street's regulatory system and its regulators are dedicated watchdogs sniffing out the merest whiffs of fraud and working the trail of clues back into the very midsts of the bad guys.

Except that we shouldn't be too thankful because it seems that our watchdogs had colds or simply chose to take a leisurely stroll around their familiar neighborhood, sniff around, urinate where they felt in necessary to mark their turf, and then return home to chew on a bone. Read Bill Singer's take on this developing story.