Some of the nation's secretaries of state want Congress to change regulations that kept them out of the loop during a federal probe of the now-defunct Stanford Financial Group.
Some of the nation's secretaries of state want Congress to change regulations that kept them out of the loop during a federal probe of the now-defunct Stanford Financial Group.
Financier R. Allen Stanford and other executives are accused of advising clients to invest more than $7 billion in bogus certificates of deposit from the Stanford International Bank in the Caribbean island of Antigua.
Officers of the National Association of Secretaries of State heard testimony Monday in Jackson about the current regulatory structure of securities and from victims who lost their life savings in the Stanford scheme.
Mississippi Secretary of State Delbert Hosemann said his office was never informed about concerns the Securities and Exchange Commission had about Stanford. If it had, he would have investigated.
"Once we get that notice, within two weeks we show up at the brokers' office and start asking questions," said Hosemann, who is co-chair of the securities committee for NASS.
In Mississippi, more than 4,500 accounts were managed by Stanford.
Hosemann presided over the hearing with Nevada Secretary of State Ross Miller and Kentucky Secretary of State Trey Grayson, the president of NASS.
Among the proposals they said may be headed to Capitol Hill is one to restore a state review of certain large, private securities offerings. A notice of such securities is filed with the SEC and the states, but since 1996 federal law has precluded states from conducting a merit review.
Hosemann said the scam artists and other predators are aware of regulatory gap.
Other recommendations include extending licensing laws to insurance agents and bank agents selling CDs and requiring better coordination between the SEC and state regulators in jurisdictions where the federal entity is contemplating civil enforcement action.
Hosemann said the proposals will be presented for approval to NASS this winter. Once accepted, the report will be part of the organization's official congressional agenda.
Grayson said he expected them to "impact the nation as a whole."
The hearing comes as federal prosecutors continue their case against Stanford, who along with three former company executives has pleaded not guilty to wire and mail fraud and other charges. Stanford has been jailed without bond since June.
Authorities have accused Stanford of fabricating the bank's balance sheets, bribing Antiguan regulators and misusing investors' money to pay for his lavish lifestyle.
Another former executive, James M. Davis, has pleaded guilty in the case and is cooperating with prosecutors.
On Monday, Dr. John Wade, head of the Louisiana Stanford Victims Coalition, also urged state officials to do whatever they could to help the victims to recoup their losses.
Wade said the coalition represents about 28,000 individuals in 36 states, but has been unable to get "basic information" about the Stanford case, including the average amount investors lost.
Wade testified about retired refinery workers in Louisiana who had to return to their jobs "in their golden years" and a teacher who has cancer but can no longer afford her medical co-pay.
"The majority were middle-class, middle-income employees who were targeted by Stanford," Wade said.
