Allegations Against Allen Stanford and Company
Allen Stanford, James Davis, Laura Pendergest-Holt and Stanford Financial Group's various firms allegedly violated the Securities Exchange Act of 1934 and the Investment Advisors Act of 1940. Allen Stanford, the flamboyant billionaire, allegedly set up a scheme convincing naive investors that his incredible returns were feasible.
Securities Exchange Act of 1934
The Securities Exchange Act of 1934 created the U.S. Securities and Exchange Commission (SEC) and prohibits manipulative and improper securities practices. The law also requires firms to disclose financial information and insider trading information.
Investment Advisors Act of 1940
The Investment Advisors Act of 1940 requires investment firms and investment advisors to register with the SEC and follow SEC regulations. This way, the SEC can regulate and oversee advisors' actions.
Allegations in the Stanford Investment Scam
In violation of the Securities Exchange Act, Stanford and company used misleading facts and omitted imperative information when pitching to their clients. Rather than using true historical returns, the company used figures from a group of mutual funds that had done well from 1999 to 2004 purporting them to be historical results. Stanford and company knew the facts they delivered to clients were false and misleading and, ultimately, convinced clients to invest nearly $1 billion in their Stanford Allocation Strategy program. Because Stanford, Davis and Pendergest-Holt were all in a position to correct false information and correct employees pitching the improbable returns, they are liable for the losses clients suffered. Stanford and company violated the Investment Advisors Act by knowingly employing misleading and abusive practices to dupe investors.
Securities Attorney
Digging through and understanding the many laws that apply to investment fraud can be difficult and exhausting. Our experienced team of securities attorneys has the expertise needed to tackle schemers like Stanford.
If you have lost money in the Stanford Investment fraud or any other investment scam, contact a securities attorney at Arnold & Itkin LLP for a free evaluation of your case.
