Part of the problem for anyone trying to understand the Stanford controversy is the complexity of the Stanford companies themselves.

Stanford Financial is really a collection of independent companies; independent insofar as there is no group company of which the individual business are subsidaries; though dependent insofar as they are all owned by one man – Sir Allen Stanford.

So here at FT Alphaville we’ve undertaken to sketch (and we stress sketch, as the below is by no means definitive) a hopefully illuminating schematic of the Stanford universe.
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Stanford Financial operates as the effective “parent” company, though it is only really a brand fascia for the agglomerated group. It has an office in Houston, where the bulk of the Stanford enterprises are headquartered, and also a government affairs unit based in Washington.

Below/alongside Stanford Financial are a series of more “productive businesses”, the centrepiece of which – in Houston at least – could reasonably be said to be the Stanford Group Company – ostensibly a FINRA/SIPC registered investment bank, brokerage, wealth management and insurance outfit (Stanford Agency Co) . The Stanford Group Company, headquartered in Houston, has twenty five regional offices spread throughout the southern and eastern states.

The greater part of the Stanford Group Co business seems to come from channeling other Stanford companies’ businesses to clients. It is a sales business, and as the only Stanford business registered with Finra, it is also the only one through which other Stanford businesses’ securities and related products and services can be offered.

For example, the Stanford Group Company, under its wealth management operations, directs clients to the Stanford Trust Company, HQ, Baton Rouge. The Stanford Trust Co has subsidiary offices in New Zealand and Columbia. Oh, and it also owns Stanford Fiduciary Investor Services (offices, Houston, San Antonio, Miami). As far as we can see, Stanford Trust Co is an advisory outfit, offering “investment strategies and products through its affiliation with Stanford Capital Management that can allocate investments throughout global markets.”

A google search throws up a less discreet description for its sister outfit Stanford Trust Co Ltd, Antigua:

As for Stanford Capital Management (goal: “to preserve principal while consistently growing capital by formulating investment strategies”), it is registered in the US as an investment advisory firm. It also trades – one Zach Penny is head of their trading outfit, although it is not immediately clear whether the operation consists of anyone other than Mr Penny.

Also in Houston is Stanford Coins and Bullion. What they deal in, at least, is self-evident. Quite how they do so, not so much.

We’ll also mention Stanford Institutional Consulting. It was only set up in December, so doesn’t have a website yet. Based in Baltimore, it…

…serves the needs of both high net worth clients and institutional clients spanning education, healthcare, foundations, endowments, associations, and retirement plans, with assets ranging in size from $10 million to over $1 billion.

No shock there then.

Then, there is of course, Stanford International Bank, the Antigua-based institution at the heart of recent controversies – and the crown-jewel in Stanford Financial’s caribbean businesses. SIB, in fact, is one of the few Stanford institutions which provides a modicum of detail about its actual assets; perhaps because the other Stanford companies are not actually deposit taking institutions.

SIB says it has just over $8bn in assets. It also has an office in Montreal.

Have we mentioned Stanford Venture Capital Holdings? SVCH is actually Houston-based, but it does have an office in Antigua and it seems proper to mention it here since it has some rather close ties to Stanford International Bank. The two companies have similar, nay, identical, holdings in a number of US penny stock businesses (more on these later). Alas, SVCH does not have a website. We just know it exists from the SEC.

In Antigua there’s also the more dimunitive Bank of Antigua (with roughly $160m of deposits).

And then there’s the Stanford Development Corporation (the identikit website of which is still in the replication tank). SDC is a real estate development company.

Real estate development is in fact something various Stanford Financial companies are quite involved in in the Caribbean. For one there’s the “Global Management Complex” in St Croix (Sir Allen has a home here); which, if completed as it is slated to be by July this year, will be the new global HQ for the Stanford network of companies. The complex surely is costing plenty $ to build anyway.

There are a host of other similarly grandiose building works being undertaken in the region too, all apparently financed by Sir Allen’s Stanford Caribbean Investment Fund (run by Stanford Caribbean Investments, also St Croix) – which reputedly has $2bn in funds. Said the Caribbean Voice in 2003:

In an interview in St Kitts on Wednesday, at the inaugural flight of his latest airline venture, he told the Sunday Express of plans to raise US$900 million from investors on Wall Street, to borrow another US$700 million through conventional financing, and to secure US$300 million in non-cash government concessions via tax breaks on import charges and corporate taxes.(That airline venture was the now-defunct Caribbean Sun, owned by Stanford Aviation until it closed its doors in 2007. The Sun’s sister airline, Caribbean Star, merged with rival airline LIAT that same year).And finally, in the Caribbean: Stanford Group Antigua and Stanford Group Aruba.From the above alone it might well seem that Stanford’s operations are indeed very American/Caribbean focused. To an extent.We’ve mentioned New Zealand above, but there’s also Switzerland. Stanford Group Suisse, relatively recently incorporated (along with its subsidiary in … Miami), is the Stanford empire’s Alpine bastion in Europe.

But where Stanford is really significant outside the US is in South America:

In Columbia, there’s Stanford Bolsa y Banca (and also that subsidiary office of Stanford Trust Co mentioned previously).

In Ecuador, there’s a couple of Stanford Group Ecuador offices. And something called Stanford Casa de Valores. And also Stanford Trust Company Administradora de Fondos y Fideicomisos, S.A.

In Mexico there’s Stanford Fondos, a Bank of Antigua office subsidiary and three Stanford Group Mexico offices.

In Panama there’s Stanford Bank Panama and Stanford Casa de Valores Panama.

In Peru, there’s Stanford Group Peru.

And in Venezuela, there are 15 registered offices of the Stanford Bank Venezuela and 5 offices of Stanford Group Venezuela Asesores de Inversion.

All of which may or may not overlap, repeat and/or be actually just one guy in an office manning an antiquated fax and a turn-dial phone with a number for SIB in Antigua jotted on a yellow pad. Who knows. We’re trying to find out.
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Like a fractal pattern, the Stanford companies seem to grow in variety – if not complexity – at a rather exponential rate the deeper one digs below the surface that is the brand. None of that is to suggest impropriety at all. Modern companies – particularly financial ones of the sophisticated variety that Stanford claims to be – are extremely intricate webs of legally separate corporations: very much financial fractals.

Smoke, of course, tends to perform fractal patterns too. And smoke is mostly air.

And that is what is a niggling concern with the Stanford companies: For all the array of different organisations and their interconnections, in terms of tangible assets, there’s actually not much pinned down on the public record, notwithstanding a rather sophisticated sales network and some eerily similar websites.

We’ll address just what – and where – the Stanford assets are here on FT Alphaville in short order.

Related links:
As Stanford allegations fly, the SEC investigates – FT Alphaville

This entry was posted by Sam Jones on Tuesday, February 17th, 2009 at 16:34 and is filed under Capital markets, People. Tagged with Antigua, houston, Sir Allen Stanford, Stanford, stanford group company, Stanford International Bank, stanford trust company. Edit this entry.