Posted by Larry Doyle on March 9, 2009 5:40 PM |
On the heels of the Bernie Madoff fiasco, there was massive pressure on the gross incompetence displayed by the SEC. Not unlike a police department that is under fire, the SEC needed a high profile case to gain a measure of vindication. Enter Allen Stanford and Stanford Financial.
I am not here to defend Allen Stanford nor any of the activities that transpired in his offshore bank located in Antigua. However, the SEC also froze the assets of all clients housed in Stanford Financial’s brokerage operation based in Houston. Unlike Bernie Madoff, who did not employ a custodian, the bulk of Stanford Financial’s assets were housed at Pershing Financial, one of the largest custodians in the business. While the concerns revolving around Stanford are in the Caribbean, the SEC’s act of freezing ALL customer accounts has been the death of this brokerage entity. Hundreds of legitimate jobs have been eliminated. Thousands of customers have faced unnecessary and undue financial hardships since February 17th as a result.
At long last, these customers have gotten a reprieve as a federal Judge Releases $500 Million in Stanford Assets. Will the media expose this travesty? Will the employees of Stanford Financial receive just compensation for the unnecessary shutdown of their business? Will the customers be made whole for the emotional stress and financial strains they have experienced?
Thanks to Harry Markopolos’ efforts, all of America knows how incompetent the SEC was on the Madoff saga. It would be overly optimistic to think that a new SEC chair would quickly change the degree of incompetence. Ms. Schapiro, the new SEC chair, did not have much of a track record herself at Finra. Given the federal judge’s order to release the customer funds which had been frozen by the SEC, it would appear that Ms. Schapiro and the new regime at the SEC are picking right up where the former SEC operation left off.
photo courtesy of Flickr