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SEC's watchdog to revisit agency's handling of Stanford probes
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| Published on Thursday, October 15, 2009 | Email To Friend Print Version
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By Jesse Westbrook
WASHINGTON, USA (Bloomberg) -- The US Securities and Exchange Commission’s internal watchdog is taking a fresh look at agency investigations of the $7 billion Ponzi scheme allegedly carried out by R Allen Stanford.
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| Allen Stanford. Bloomberg photo |
SEC Inspector General H David Kotz said he is conducting the review in response to a request from US Senators Richard Shelby and David Vitter that he do a more “comprehensive and complete investigation.” The Republican lawmakers, in an Oct 9 letter to Kotz, contrasted his 11-page report on the Stanford investigations with an almost 500-page document he produced last month on the agency’s probes of Bernard Madoff.
“A failure to thoroughly investigate this matter would be detrimental to the interests of the thousands of Stanford victims,” Alabama’s Shelby and Louisiana’s Vitter wrote.
In an interview today, Kotz said his office has already begun the review. His examination triggers new scrutiny of the SEC’s investigative prowess as it tries to restore confidence among investors and lawmakers who faulted the agency for missing Madoff’s $65 billion Ponzi scheme.
Shelby and Vitter asked that Kotz interview current and former SEC employees who investigated Stanford, review e-mails that mentioned his business and examine agency communications with brokerage regulators and other government agencies.
The lawmakers also asked Kotz to assess whether anyone exerted pressure on the SEC and whether the agency “made decisions regarding Stanford that were not based on legitimate policy considerations.”
Kotz’s findings will assist Congress as it considers legislative reforms that will ensure regulators “more quickly detect and shut down” Ponzi schemes, Shelby and Vitter said in their letter.
“We fully cooperate with the Inspector General in any of his investigations,” SEC spokesman Kevin Callahan said. “He has independence with respect to his choice of what to investigate.”
The SEC in February accused Stanford of running a fraud that promised improbable returns on certificates of deposit issued through an affiliated bank in Antigua. After receiving documents through a court-appointed receiver, the SEC amended its complaint to accuse Stanford of operating a “massive Ponzi scheme.”
Stanford, who denies wrongdoing, was indicted by the US Justice Department on June 19 and is jailed in Houston while awaiting a criminal trial.
The review of Stanford investigations that Kotz released July 28 concluded the agency didn’t breach “its obligations to vigorously pursue allegations of wrongdoing.”
An investigation launched in June 2005 was stymied by a lack of cooperation from Stanford and government officials in Antigua, Kotz said. The SEC halted its probe at the Justice Department’s request after making a referral about Stanford to federal prosecutors in April 2008, according to Kotz.
He criticized the SEC’s handling of Madoff investigations. In a 457-page report released Sept. 4, he said the agency never conducted a “competent” inquiry of at least six outside tips dating back to 1992.
Madoff, 71, is serving a 150-year prison sentence after pleading guilty in March to using his money-management business to raise funds from new investors to pay off old clients. | | | | Reads : 742 | | | |
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