ST. JOHN’S, Antigua-SPECULATION that Texas billionaire Sir Allen Stanford will be retracting many of his cricket investments in the Caribbean were bolstered yesterday (Feb. 12) as reports began to surface that the businessman is being investigated by three independent United States regulatory boards.
It has been reported by Bloomberg that Sir Allen’s Houston-based investment firm, Stanford Group Co., will be investigated by the United States’ Financial Industry Regulatory Authority, the Securities and Exchange Commission and the Florida Office of Financial Regulation in the near future.
The reason for the investigations allegedly stemmed from the sale of certificates of deposits from Antigua-based Stanford International Bank (SIB) and “the consistent, above-average returns those investments pay”.
SIB is said to have reported returns on investments between 10.3 and 15.1 percent every year between 1995 and 2008 the bank’s website reports, with assets estimated to be in the region of US $8.5 billion divided among its 30,000 clients.
“That type of return ignores the business cycle,” financial investigator L. Burke Files told Bloomberg. “His returns fall outside the bell curve of probability.”
Any investigation into Sir Allen’s assets is not likely to benefit Caribbean cricket fans, as the sport has been bolstered in recent years by the billionaire’s high stakes Twenty20 tournaments.
Cricket commentators have largely speculated that the Twenty20 for US $20 million tournaments scheduled by Sir Allen over the next half-decade have been scrapped after last year’s event in Antigua was rife with conflict between himself, the West Indies Cricket Board and telecommunications company Digicel.
The December closure of Sir Allen’s Antigua cricket office and disbanding of his “board of legends” seem further indicators that the investor is ready to pull up stakes and cut his losses in the pet project of cricket revival.
Financial investigators probing SIB are likely to be asking a related question as they pour over the numbers: how is the Stanford Group Co. reporting such profitability when its investments seem to be losing ground in recent years?
In recent years SIB is said to have invested heavily in stocks, real estate, hedge funds and precious metals—the precise commodities that have been greatly devalued because of the global financial crisis. In spite of those seeming hits, Bloomberg reported the Stanford Financial Group as having “boosted the assets it oversees by 30%, to more than US$50 billion”.
Sir Allen and his spokespeople, however, have called the investigations nothing more than a “routine exam” that has been blown out of proportion.
“We are all aware that former disgruntled employees have gone to the regulators questioning our work and our processes,” the billionaire allegedly said in an email to employees Thursday (Feb. 12).
“On the issue of Stanford International Bank, I want to be very clear. SIB remains a strong institution, and even without the benefit of billions in U.S. taxpayers’ dollars we are taking a number of decisive steps to reinforce our financial strength. We will take the necessary actions to protect our depositors,” he further stated.
Impact on Caribbean cricket without Sir Allen’s large financial contributions is a very real concern, and West Indies Captain Chris Gayle addressed the issue this morning (Feb. 13) with the Associated Press as he prepared for a second Test against England at Antigua’s Sir Vivian Richards Stadium.
“It would be disappointing if [Sir Allen] actually walked out. He has done a lot for us,” Gayle said. “Our cricket has been down for quite some time so obviously we need as much as we can get to actually come alive again.”
