Monday, July 20, 2009

Fox Business Breaks Stanford Whistleblower Story

Although I tend to write about national and international issues, I cannot help but notice an important story that broke out very close to home and is having an impact through out the world of finance. Allen Stanford, who has been accused of being a "Mini Madoff" has dominated the headlines of finance newspapers for weeks and people have been trying to get a handle on the full extent of the damage he has done. Fox Business Network, in a recent interview with Stanford whistleblower Leyla Wydler has helped significantly in that effort. The network was the first to break with the Wydler interview.

Being interviewed by Fox's Adam Shapiro, with her attorney Mike Falick, Wydler went into detail about "what she knew," "when she knew it," and the efforts she took to get the word out to others.

This important interview included:

  • Wydler’s attorney Mike Falick on the response they got from the NASD, now FINRA, during their lawsuit: “We were told by FINRA that our document request was irrelevant. Obviously, the document request was highly relevant, and had we gotten those documents not only would Leyla have won her case, but maybe 30,000 people wouldn’t have lost their life savings."
  • On being pressured to bring more deposits to Stanford Financial’s off shore bank: “I was constantly bombarded with emails, telling us to bring more deposits into the bank. Management, and the managers there, they would be sending us emails and they even had scorecards and make teams within the offices, to see who would bring more deposits in.”

  • On why she questioned Stanford Financial’s off shore CDs: “I knew they were not FDIC insured, I looked at their financial statements their financials were not audited by US reputable account firm, instead it was done by an unknown firm in Antigua, to me that was a red flag. I was not going to put my clients into a CD that seemed safe and very liquid when in fact it was not."

  • On why she was terminated from Stanford Financial Group: “In 2000, I was recruited to work for Stanford as a broker. As a broker dealer, and not to sell their offshore product, which was at the bank in Antigua. I went through arbitration back in 2002 when I was terminated, I was working for Stanford since 2000 until 2002, and it was mainly because I was terminated because of my reluctance to sell those CDs.”

  • On how the NASD, now FINRA, reacted when she claimed that Allen Stanford was running a Ponzi Scheme: “I guess indifferent, you know they didn’t even do their due diligence and say ‘Ok, I would like to see their portfolio appraisal and be verified by a 3rd party and to prove her wrong’.”

  • On going to the SEC in 2004: “I had a list of everything, all my concerns. I wrote down a document and sent it to them and I told them these are my concerns, this is what happened, look into it, this might save people’s savings in the future, because we can stop this. And it was just sent to them, and that’s it.”

  • On how much money would have been saved in NASD, now FINRA, would have listened to her: “When I left I believe that there was about a billion dollars in the bank and it ended at 7.2 billion.”

It was a "must see" interview and provided the kind of information that, if the regulators had been doing their job, would have saved people billions of dollars.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

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