Stanford Fraud Rattles LatAm

LatAm regulators have been engaged in damage control since Texas-headquartered Stanford Bank was accused by the SEC on Tuesday of engaging in massive fraud. In Colombia, Stanford’s brokerage unit, Bogota-based StanfordEagle, voluntarily suspended operations and is returning funds to investors, says an analyst who works there. “We never saw this coming. It took us completely by surprise,” he says. According to data from the local securities regulator the brokerage had COP21.5bn in capital at the end of 2008. In Venezuela, the finance ministry says it has seized Sociedad Mercantil Stanford Bank, which has 15 local branches, and says it plans to sell the institution. The ministry also says potential acquirers have already expressed interest. In Antigua & Barbuda clients stormed the Stanford-owned Bank of Antigua to withdraw their funds, but the Eastern Caribbean Central Bank says that an inspection of the bank reveals it is in sound condition. “The Bank of Antigua has sufficient liquidity at its offices and reserves at the central bank to meet the requirements of the public and its customers under normal circumstances. However, if individuals persist in rushing to the bank in a panic they will precipitate the very situation that we are all trying to avoid,” the bank says in a statement. And Mexico’s banking regulator says it is investigating the local Stanford bank affiliate, Stanford Fondos, for possible violation of banking laws. It also says it has not seized the bank nor has it frozen its assets. Securities regulators of Ecuador and Peru have suspended the operations of local Stanford units, they say.