Financial advisers who worked for Houston-based Stanford Group Co. stepped into the legal fray surrounding the $8 billion fraud case involving Texas financier R. Allen Stanford for the first time today.
Thirteen Stanford advisers, as well as several Stanford clients, filed a civil lawsuit in U.S. district court in Houston yesterday afternoon against the Securities and Exchange Commission and Ralph Janvey, the Dallas-based attorney who is the court-appointed receiver in the Stanford fraud case.
He has frozen all Stanford accounts and has said that he will file a plan by March 16 to start releasing accounts of less than $100,000 to their owners.
The advisers and clients are charging the SEC and Mr. Janvey with violating their constitutional rights and with misrepresentation, negligence and gross negligence under Texas law.
“The advisers’ First Amendment rights were violated when the receiver told them they couldn’t contact their clients,” said Michael Stanley, partner for Stanley Frank & Rose LLP, the Houston-based law firm representing the plaintiffs.
The financial advisers in the suit are also Stanford investors, he said. They are seeking unspecified damages, which could turn out to be “substantial,” according to Mr. Stanley.
The damages will be based “on the market loss that the accounts suffered while the clients were frozen out and not allowed to make any investments,” he said.
Mr. Janvey did not return calls seeking comment on the case.
John Nestor, spokesman for the SEC said, “We stand by the allegations of wrongdoing we presented to the court. The court’s order authorized the receiver to obtain and marshal the assets of the defendants to protect investors.”
