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Last Updated: Jul 4, 2009 - 8:19:20 AM |
Kroll Inc., a risk-consulting firm hired to review Stanford
International Bank Ltd.’s finances, was accused in a lawsuit of failing
to find “numerous red flags” that cost a tradesmen’s group $2.5 million.
The National Electrical Contractor’s Association Inc. accuses Kroll, a
unit of Marsh & McLennan Cos., the second- biggest insurance
broker, of “gross negligence” when it issued a “clean report” in 2007,
according to the complaint filed May 26 in federal court in Miami.
“Kroll submitted a falsely positive report knowing it would be used and
relied upon,” the association said.
Emilie Moghadam, a Kroll spokeswoman with the firm Fleishman-Hillard,
said, “Kroll denies liability in connection with this engagement.”
Antigua-based Stanford International, accused by the U.S. Securities
and Exchange Commission of an $8 billion fraud, has denied any
wrongdoing. Texas financier R. Allen Stanford and two other bank
executives also have denied wrongdoing in that case.
Kroll reported that Stanford’s critics and competitors complained that
its interest-rate returns were “impossible,” according to the
complaint. Kroll failed to report any disciplinary action and
litigation in the U.S. against the bank or its Houston-based Stanford
Group Cos. affiliates, according to the complaint.
NASD Fine
The omissions of publicly available information included a $20,000 fine
in 2007 against Stanford by the National Association of Securities
Dealers for failing to maintain enough capital to function properly as
a brokerage firm, according to the trade association’s complaint. The
association also cited a 2006 state lawsuit in Florida by an employee
who accused Stanford of running a Ponzi scheme.
The Kroll report “represented there was no disciplinary history” in the
U.S. involving the bank, the trade group said in its complaint. The
group invested all of its money in the bank’s certificates of deposit,
according to the suit.
The case is National Electrical Contractor’s Union v. Kroll Inc.,
09cv21415, U.S. District Court, Southern District of Florida (Miami).
The SEC case is SEC v. Stanford International Bank, 3:09-cv- 00298-N,
U.S. District Court, Northern District of Texas (Dallas).
Source:Ocnus.net 2009
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