The US Securities and Exchange Commission alleged that Stanford International Bank, located in St John's, Antigua, and one of several companies run by Mr Stanford, sold about $8bn in “certificates of deposits” by promising “improbable and unsubstantiated high interest rates”.
The SEC accused SIB of falsely claiming that customers' deposits were safe and that the bank re-invested client funds primarily in “liquid” financial instruments. The bank also falsely claimed that it had no “direct or indirect” exposure to the $50bn Ponzi scheme allegedly perpetrated by Bernard Madoff, which came to light in December.
SIB has been the focal point of much controversy in recent weeks, sparked in part by an analyst note that was highly critical of the bank's apparent ability to deliver consistently and significantly market-beating returns on its $8.5bn portfolio of depositors' assets. SIB does not operate like a standard bank. Instead, it offers depositors an attractive fixed rate of interest paid out of investment returns. The bank makes no loans.