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2009-02-23

Ecuador Audits Stanford Group

Miranda Navarro

Ecuadorian authorities announced audits of two of the three firms tied to Stanford Group in Ecuador, following growing fear and caution by investors in response to investigations and fraud allegations against Texas billionaire Robert Allen Stanford.

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A journalist stands in front of the main entrance of Stanford Bank in Caracas on 19 February, 2009. Venezuela and Ecuador announced immediate audits of firms affiliated with the Texan billionaire Robert Allen Stanford, accused of defrauding investors around the world.

A journalist stands in front of the main entrance of Stanford Bank in Caracas on 19 February, 2009. Venezuela and Ecuador announced immediate audits of firms affiliated with the Texan billionaire Robert Allen Stanford, accused of defrauding investors around the world.

QUITO, Ecuador – On 19 February, Ecuador’s stock market regulator announced audits of two of the three firms in the country linked to the Stanford group, owned by Texan billionaire Robert Allen Stanford, who is accused of financial fraud worth US$8 billion.

While anxious Ecuadorian investors positioned themselves outside the group’s offices at the World Trade Centre in Quito, the stock market regulator, Santiago Noboa, decided to audit Stanford’s fund management and brokerage firms, and appointed Marco Sánchez as the auditor in charge of this process, according to a report by El Universo.

El Comercio reported that Stanford is authorised by the country’s companies regulator to perform stock brokerage activities through Stanford Group Casa de Valores, provide professional services though Stanford Services Ecuador and fund administration though Stanford Trust Company.

“We consider it appropriate … to exercise the right to audit the companies in Ecuador in which Allen Stanford holds a stake: Casa de Valores Stanford and Administradora de Bienes y Fideicomisos Stanford,” said Noboa, according to El Universo. Noboa estimated that these companies administered around US$100 million in the country.

El Comercio also reported that the fund management firm oversees a fund worth US$5 million with 120 clients and 150 property and surety trusts worth US$78 million. Other sources stated that the funds managed by the firm include the Quito Cable Railway trust.

Stanford group’s stock brokerage firm in Ecuador, which was suspended for 30 days, holds a client portfolio worth US$10 million.

In an attempt to calm local investors, the regulator assured that the audit would allow them to keep their assets and look for another firm to manage them.

“As far as we know, they are safe investments in non-toxic papers,” assured Noboa, according to reports by La Hora.

The newspaper explained that the assets worth nearly US$5 million held by the fund management firm are invested in shares in banking organisations, supermarkets and other Ecuadorian companies quoted on the stock market.

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