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SEC charges financier in $8 billion investment scheme

[JURIST] The US Securities and Exchange Commission (SEC) [official website] charged [complaint, PDF; SEC press release] financier Allen Stanford [professional profile] Tuesday with orchestrating a fraudulent $8 billion investment scheme by selling certificates of deposits on the promise of improbably high interest rates. Stanford, through his investment companies - Stanford International Bank (SIB), Stanford Group Company (SGC) and Stanford Capital Management (SCM) [corporate websites] - is accused of violating the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 [materials]. US District Judge Reed O'Connor issued a temporary restraining order to freeze Stanford's assets, as customers have rushed to withdraw their investments from SIB branches in Antigua and Venezuela.

Stanford faces many of the same charges as Bernard Madoff [JURIST news archive], who is accused of coordinating a multi-billion dollar Ponzi scheme [JURIST report]. Last week, Madoff consented to a partial judgment [JURIST report] with the SEC over civil charges brought by the SEC to obtain a preliminary injunction and asset freeze against him. According to the SEC, the agreement will continue the previously imposed preliminary injunction, but in consenting to the agreement, Madoff will neither admit nor deny the SEC's allegations. The Stanford and Madoff charges, in concert with global economic woes, may invigorate the debate on financial regulation.

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