Stanford Broker Fired For Asking Questions About Returns


Several ex-Stanford employees filed lawsuits against the company alleging that it was a Ponzi scheme (which apparently didn’t trouble the SEC). Another, the AP reports, was fired for asking questions about how the company generated its apparently-amazing returns.

AP: Hazlett was a top performer at Stanford’s bank, having sold $10 million in certificates of deposit in a single quarter of 2002. The company rewarded him with a new BMW.

But when a client asked Hazlett for details about the investments, no one at the bank would give him even basic information about risk ratings and asset allocation, he said in an interview.

Eventually, Hazlett said, he called a meeting with a top officer of the bank to ask how the investments worked. Instead of answers, he got an ultimatum: Resign or be fired.

“I kind of peaked when I won the car and was doing great, but as soon as I started questioning things at the bank, they were setting up to let me go,” Hazlett said.

It wasn’t just promises to investors of earning twice the normal rates on certificates of deposit that fed his suspicions, Hazlett said. The company also lacked detailed balance sheets. And it used a small and little-known accounting firm.

Hazlett testified about all this in an arbitration case, which the SEC could have had access to.  Apparently it didn’t bother.

Meanwhile, Stanford’s chief investment officer had no idea where 90% of the company’s money was invested…and was explicitly trained to give vague responses to questions.

Even the man responsible for selling multimillion dollar CDs and overseeing the bank’s investments said he was rebuffed when he asked where the money was, court records show.

[Michael] Zarich said he was trained to deflect questions about the investment strategy while pitching to wealthy clients in Antigua, where the bank chartered.

His tutor on the evasive pitch was Stanford chief financial officer Laura Pendergest-Holt, Zarich said. He said she laid out the strategy in a series of training sessions in Memphis in 2005, according to court documents.

“I was trained not to divulge too much information, but it just wouldn’t leave an investor with a lot of confidence,” he said in a Feb. 4 meeting with SEC lawyers.

Clients would “just push, push, push,” he told the lawyers. “‘Give me an actual security. Give me something,'” he said they demanded.

But when he tried to learn how the money was invested, Pendergest-Holt and Stanford’s deputy James Davis turned him away, Zarich said.

Read the AP’s full story >