Stanford fraud hurts confidence
TEXT OF STORY
Steve Chiotakis: First there was Bernie Madoff and his alleged $50 billion Ponzi scheme. Now, flamboyant businessman R. Allen Stanford is accused in an $8 billion fraud. While investors lost a lot of money, the true cost could be even higher. Here’s Marketplace’s Dan Grech.
Dan Grech: The Securities and Exchange Commission says R. Allen Stanford lulled investors with the promise of safe, high returns. And it worked — for 15 years.
Tom Ajamie is a securities law attorney in Houston:
Tom Ajamie: The old saying goes that, “You don’t know who’s swimming naked until the tide goes out.” And you really don’t know who’s poorly managing money until people start trying to withdraw their money.
People are trying to withdraw their money from financial institutions because they no longer trust them.
Ajamie: The loss in confidence tears away at the fabric, the financial fabric of the country. And you have a situation where it’s hard to get investments. When you don’t have investments, it’s hard to build businesses. When you can’t build businesses, you can’t provide jobs. So there are clearly larger repercussions to all this.
The SEC has frozen the assets of Stanford and three of his companies. But Ajamie predicts few Stanford investors will see their money again.
I’m Dan Grech for Marketplace.
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