Thursday, February 19, 2009

Mini-Madoff is No Madoff at All

According to The Business Insider, Allen Stanford, the Texas billionaire charged Tuesday in an $8 billion fraud by the SEC, apparently lied to his clients about losing any money with Bernie Madoff; however, Allen Stanford did not do a "ponzi" scheme like Madoff. Further, the SEC accuses Stanford's company, Stanford Financial, of misrepresenting the performance and safety of its "CDs" by claiming that the money was invested in safe, liquid securities, while in actuality the money has been invested in in illiquid private equity and real estate ventures. So it looks like individuals and corporations who held their money with Stanford may not see the worst of the hedge fund blow-ups; but they'll still lose money.

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