SEC Missed Stanford Warning Signs

Minor fines levied for violations that should have been red flags
By Rob Quinn,  Newser Staff
Posted Feb 19, 2009 5:24 AM CST
Investigators from the US Marshals office walk out of the offices of Stanford Financial Group and head to their other office building this week in Houston.   (AP Photo/Houston Chronicle, Steve Campbell)
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(Newser) – Years of SEC probes into the Stanford Group's finances resulted in wrist-slaps for violations that experts believe should have been huge red flags for investigators, the New York Times reports. The firm, suspected of engaging in an $8 billion fraud, paid out just $60,000 in the past 2 years to settle three separate claims of securities violations.

The company paid $10,000 in 2007 to settle charges of not having enough capital to operate as a broker-dealer, a condition that should have been a clear danger sign, one expert said. "Either the firm is in big financial trouble, or it’s hugely incompetent. Neither one is good,” he said. The SEC, often accused of lax enforcement in the past, is reviewing its handling of the case.