Stanford Props

Posted by: Matthew Goldstein on February 12

The burgeoning investigation of R. Allen Stanford’s fast-growing Stanford Financial Group is a story to keep an eye on. As we reported, there’s good reason for securities regulators to be skeptical of the high-yielding CDs peddled by Stanford’s offshore Antigua-based bank—Stanford International Bank.

Don’t be surprised if this story proves to have legs. And we’ll keep on it both in the magazine and here at Unstructured Finance.

But we must give a shout-out to a former financial analyst and writer who was early on the Stanford case—and that’s Alex Dalmady. Now living in south Florida, Dalmady used to be based in Venezuela. Last month he wrote an article for VenEconomia, a Venezuela-based financial publication, in which he questioned the business model of Stanford’s offshore bank and its ability to consistently pay double-the-market rates on certificates of deposit. Dalmady penned the piece after being asked to take a look at the bank by a friend who had some money with Stanford’s bank.

Dalmady says he was pretty shocked by what he found at Stanford. “I just went to the balance sheet of the bank and I said, ‘this isn’t right,’’’ says Dalmady. “They play the stock market and that’s not been doing well. Yet their results are incredible. I just don’t believe it.’’

You can get Dalmady’s piece at this site.

Reader Comments

Jane

February 12, 2009 12:44 PM

PONZI!!!!

Dutton Peabody

February 12, 2009 02:08 PM

More evidence of financial problems at Stanford.

The 2007 Convertible note in Transwitch was repurchased by TXCC at a discount to par at the end of 2008. TXCC paid 9.5M to redeem 15M of debt from Stanford

From the PR:

http://biz.yahoo.com/bw/090205/20090205006235.html?.v=1
“Additionally in the fourth quarter, we strengthened our balance sheet by purchasing $15 million principal amount of our 5.45% Convertible Notes due in 2010 at a considerable discount to par,” added Dr. Das.

jan

February 12, 2009 05:36 PM

i left stanford bank aprox 10 years ago, after i found out their annual report contained a falsified copy of an article, Stanford suggested was published in the Wall Street Journal. I called the WSJ, they told me they never wrote or printed the matter. I was realy good counterfeith. The article wrotr something like "Stanford beats the competition again"

Dalmady

February 13, 2009 05:21 PM

That was a good catch, Mr. Peabody.

I hadn't seen that. Who does that? (I mean sell a note back to the co for such a deep discount).


John

February 14, 2009 02:19 PM


Don't worry, this story has legs...and a tail, horns and a forked tongue. I have been waiting a long time to see this house of cards flattened It was only a matter of time. Matt, you're going to have very hard time finding people who love Stanford. They have done so many people wrong and have absolutely no remorse. The sense of entitlement among the Stanfrod executives would rival those of hedge fund managers. The whole corporate culture is a direct reflection of the man at the top, Sir R. Allen Stanford.

Thank you for your interest. This blog is no longer active.

 

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BusinessWeek's Adrienne Carter, Jessica Silver-Greenberg, and David Henry deconstruct the mysteries of high finance, Wall Street, and hedge funds for pros and ordinary investors. E-mail them directly if you've got tips about big deals, a hedge fund, or even securities industry gossip.

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