Employees of troubled investment firm laid off

According to an order, those laid off will receive no severance and regular salary and benefits will be cut immediately.
By MICHAEL GRACZYK
The Associated Press
HOUSTON – About 1,000 people working around the nation for the troubled Stanford Financial Group founded by Texas billionaire R. Allen Stanford were laid off Friday by order of the court-appointed receiver in the investment firm’s case.
“After a review of the circumstances, the receiver concluded that continuing employment for these employees is not in the interest of conserving and preserving the value of the estate because there are insufficient resources to continue to compensate all present employees,” the receivership said in a statement.
The order affects about 85 percent of Stanford’s U.S. workers, although the receivership said most of Stanford’s business and operations “will be discontinued or wound down.” Those remaining on the payroll, primarily at Stanford’s Houston headquarters, would be involved in the shutdown.
According to the receivership’s order, those laid off effective Friday will receive no severance and regular salary and benefits will be cut immediately.
The Securities and Exchange Commission has accused Stanford and his finance chief James M. Davis of conducting a “massive Ponzi scheme” through companies they controlled, including Antigua-based Stanford International Bank. Stanford and Davis misappropriated billions of dollars of investors’ money and falsifed the bank’s financial statements to conceal the fraud, the agency said in an amended civil complaint filed in federal court last month in Dallas.
The SEC on Feb. 17 brought civil charges against Stanford, Davis and Laura Pendergest-Holt, the chief investment officer for the company, alleging an $9.2 billion investment fraud where investors were lied to about the safety of investments sold by the bank as certificates of deposit and promised unrealistically high rates of return.
An attorney representing Stanford has said his client denies the allegations made by the SEC.
FBI agents served Stanford with legal papers last month and he was ordered to surrender his passport, but has not been charged with a crime.
The SEC has frozen the assets of three of Stanford’s companies.
On Thursday, a federal judge issued an order lifting a freeze on about 12,000 investor accounts valued at $250,000 or less as of Feb. 28, at the request of the court-appointed receiver. That order takes effect Monday.

 

Data Stream