By Tricia N. Henry
Caribbean Net News Staff Reporter
Email: tricia@caribbeannetnews.com

ST JOHN’S, Antigua: The United States Securities and Exchange Commission (SEC) is currently investigating Antigua-licensed Stanford International Bank (SIB) and its parent, the Texas-based Stanford Group, regarding the sale of certificates of deposit issued by SIB and mutual fund wrap programmes.

The offshore bank is controlled by Texas billionaire Allen Stanford and, according to Bloomberg News, the SEC issued subpoenas to two former Stanford Group financial advisors, Mark Tidwell and Charles Rawl, on July 2 of this year.

Both former employees were asked to submit several documents, including, but not limited to, those related to products and services offered or recommended by the Stanford Group; communications between the Stanford Group and its customers or potential customers; documents relating to promotions, bonus or sales incentives; the company’s organisational charts; and due diligence documents.

Meanwhile, reports are that Tidwell and Rawl are currently suing Stanford Group Company for unquantified damages for unfair dismissal.

According to the complaint, both men were “constructively discharged and wrongfully terminated by Stanford [Group Company] for refusing to participate in conduct that could subject them to criminal prosecution and/or penalties”. The plaintiffs claimed that they were given a “’Hobson’s Choice’ of either participating in illegal conduct, or to resign to avoid potential criminal prosecution and/or penalties as a willing participant with Stanford”.

“During the course of their employment, Plaintiffs became aware of certain illegal practices at Stanford involving the sale of SIBL certificates of deposit and other securities offerings. In multiple communications and meetings, Plaintiffs encouraged and requested the management of Stanford to correct its practices and to institute procedures to comply with the legal requirements governing the securities industry,” the complaint said.

"When management of Stanford refused to take any corrective action, Plaintiffs became concerned that these illegal practices could implicate them given their knowledge of these activities, and sought the advice of an outside securities counsel to determine the proper course of conduct.”

Meanwhile, the Stanford Group has formally denied knowledge of the SEC investigation. Its spokeswoman, Lula Rodriguez was quoted in a July 3, 2008 article by Bloomberg as saying that the company was “not aware of any formal actions by the SEC related to either Mr Tidwell or Mr Rawl or connected to any of our clients”.

According to the Bloomberg article, Rodriguez went on to describe Tidwell and Rawl as “disgruntled employees”, adding that their allegations were “totally without merit”.

This is the second offshore bank controlled by Stanford that has reportedly been investigated by regulators in the past 19 years.

According to financial newsletter, Offshore Alert, in the late 1980s in an effort to avoid having its licence forcibly revoked by local authorities, Stanford’s Montserrat-licensed Guardian International Bank voluntarily surrendered its licence as part of a general clampdown by the authorities against approximately 300 banks licensed in the jurisdiction.