When Charles Satterfield joined Stanford Financial Group in 2005 as managing director of fixed income, he had no idea this meant peddling Certificates of Deposit.
“They wanted to tie my compensation directly to sales of the bank CD,” said Satterfield, a fixed-income investment strategist.
“When grandma came in and wanted stability and a little bit of income, my answer was supposed to be, “Oh, the bank CD.” “When a young guy came in and wanted to grow his principal, my answer was supposed to be, “Oh, the bank CD.” “No matter what the question was, I was supposed to answer, “the bank CD.’”
R. Allen Stanford is now behind bars awaiting trial for allegedly running a Ponzi scheme with…the bank CD.
Stanford, whose alleged scheme is second only to Bernie Madoff’s, blames regulators for his financial empire’s collapse, and has pleaded not guilty to multiple charges.
His former college roommate, Jim Davis, who served as chief financial officer, has already pleaded guilty to fraud charges and is assisting prosecutors. A few others, including chief investment officer Laura Pendergest-Holt, also have been charged and have pleaded not guilty.
Satterfield–a 20-year financial industry veteran who had worked on Wall Street before joining Stanford–said the company would fly him down to Mexico to greet investors with a team of sales-driven investment advisers.
“And they’d say, “We’ll, he’s the expert in fixed income and he says, “the bank CD.” Everything was around selling the bank CD, and I told them I couldn’t do that.”
In May 2007, when Satterfield asked top Stanford executives to put in writing their guidance that he should push CDs over other fixed-income investments he was fired the next day.
Stanford executives then blackballed him in a report to the Financial Industry Regulatory Authority.
“They said they fired me because I was unable to meet expectations,” he said. “Basically, they said they fired me because I was incompetent.”
Satterfield lives in Houston and now does consulting work. He filed a complaint with Finra in October 2007, alleging that Stanford fired him to maintain Stanford’s code of silence. And then “it filed what it knew to be a materially misleading, inaccurate, fraudulent and defamatory Form U-5″ report with Finra.
In his complaint, Satterfield accused his former employer of outright contempt for securities regulations. But he had no idea then that it would become one of history’s biggest alleged Ponzis.
“I just thought these guys were idiots,” he said. “I didn’t have a clue how corrupt these morons were.
“They had no business plan. .. They were winging everything they did.
“Everyone thought this was their big chance to get wealthy. And everybody was doing whatever was in their best interest…stabbing people in the back.
“For a lot of people who worked there, this was the best job they ever had, and the best job they were ever going to have.
“Not a one of them in senior management positions ever worked for a reputable Wall Street firm. Not a one of them…had an advanced degree. .. Not a one of them had any training from a reputable business school. It was a clown college.”
Satterfield said he brought his concerns about securities law violations to the attention of Stanford’s senior executives, including Stanford’s compliance director, Bernerd Young, a former Finra regulator, who I wrote about on Oct. 6.
“They would routinely say this is the Stanford way of doing things,” Satterfield said. “The argument was that we were growing so fast, that we were doing something that was never done…and that eventually the growth would slow off and we’d get things corrected.
“They’d say, “If you can’t handle change, and if you can’t handle growth, then you better leave.
“I wanted to make sure my little corner of this world was absolutely by the book,” he said.
Finra arbitrators, however, barely regarded Satterfield’s complaint, Satterfield said, and Finra regulators did not take notice of his accusations against Stanford.
“Arbitrators are not Finra employees,” said Finra spokeswoman Nancy Condon. “If they did not refer allegations made in a counter-claim to Finra, we would not have been aware of the allegations made.”
Finra–which recently issued a lengthy report on how it missed the Madoff and Stanford debacles–is now reviewing such claims. But in the case of Stanford, there’s also the issue of trying to regulate a foreign bank since much of the firm was strewn across the Caribbean.
Satterfield said this regulatory posture from both Finra and the Securities and Exchange Commission is what emboldened Stanford.
“Every time they came in and did nothing, Stanford used that as part of his marketing, and got the rank and file to believe in it even more,” Satterfield said.
“If Finra is in here and they find nothing, if the SEC is in here asking for documents and come up with nothing, where…are you coming off complaining?”
Satterfield said Finra’s arbitration powers should really be reserved for the courts. He says the self-policing regulatory body allowed Stanford to marginalize anyone who would speak out as a disgruntled former employee. There were plenty of people who might have pointed out irregularities, but look what happened to those who did.
“If you said anything. If you resisted, or said no.. If in any way you cause trouble for them. They fire you. Then they attack you. .. “Don’t” pay any attention to him. He was fired because he was incompetent.”
Satterfield said even some of his friends didn’t believe him until the whole firm imploded and felony charges were filed.
“Everyone was saying, “Look, Charles, big companies don’t do this to star employees,’” he said. “But after it hit the fan, everyone said you weren’t kidding. You knew exactly what you were talking about.”
It’s no longer a dark spot on his resume. “Unable to meet expectations” at an alleged Ponzi scheme is a good thing.
–(Al’s Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. The column is generally published each Tuesday and Thursday at 9 a.m. ET. He can be reached at 212-416-2617 or by email at firstname.lastname@example.org , or on his blog at tellittoal.com.)
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