The Securities and Exchange Commission didn't conduct a meaningful probe of indicted money manager R. Allen Stanford until 2005, even though examiners suspected him of operating a Ponzi scheme eight years earlier, an internal report found.
The agency's Fort Worth office did four reviews of Houston-based Stanford Financial Group Co. starting in 1997 and determined after each one that Stanford's purported returns on certificates of deposit were highly unlikely, SEC Inspector General H. David Kotz wrote in a report released Friday.
The SEC sued Stanford, 60, in February 2009, claiming his Antigua-based firm, Stanford International Bank Ltd., defrauded investors by selling billions of dollars in bogus certificates of deposit. He is jailed awaiting a January trial on related criminal charges that he oversaw a $7-billion Ponzi scheme.
"Much has changed and continues to change regarding the agency's leadership, its internal procedures and its culture of collaboration," SEC Chairman Mary Schapiro said in a statement. "We will carefully analyze the report and implement any additional reforms as necessary."