The SEC's five commissioners are scheduled to vote Thursday on whether to authorize the enforcement actions, which target brokers and senior executives at Stanford's Houston, Texas-based brokerage, Bloomberg quoted its sources.
The actions, which seek to bar the executives and brokers from working in the industry and claw back sales commissions, come almost three years after the SEC sued Stanford and a federal grand jury indicted him on 21 criminal counts alleging he used his U.S. brokerage to sell bogus certificates of deposits for his Antigua-based bank.
The SEC lawyers claim the employees ignored red flags signaling that they were selling fraudulent products, such as above-market returns promised on the CDs and outsized commissions to the brokers who sold them, reports say.
The investigators are treating the cases as a legal test of whether they can sanction brokers for failing to conduct due diligence on in-house products. If successful, the cases could be replicated against more ex-Stanford brokers over time, insiders say.
One of the former Stanford employees whose actions were reviewed by investigators is Bernerd Young, the former regulator who later became Stanford's chief compliance officer. Young received a notice in June 2010 from SEC investigators that they planned to recommend an enforcement action against him for his role in the Stanford matter.
Young became the top compliance official at Stanford's brokerage in 2006 after having worked nearly two decades at the National Association of Securities Dealers, which later became the Financial Industry Regulatory Authority, the brokerage industry's self-regulator.
Stanford, 61, denies the fraud allegations as he faces a Jan. 23 trial start in Houston.
The SEC has been reviewing the case for more than two years as Stanford customers and lawmakers criticized investigators for not catching the alleged scheme sooner.