The Stanford class action lawsuit was filed late Tuesday in the U.S. District Court for the Southern District of Texas by four investors who allege that they lost $1.75 million in Stanford CDs.
An offshore bank in Antigua controlled by Texas billionaire Allen Stanford sold high-yield certificates of deposit (CDs). The U.S. Securities and Exchange Commission filed civil charges against the bank.
They are accused of making false promises and providing fake double digit returns.
The certificates of deposit were sold as a liquid and secure investment and the historical performance records were grossly misrepresented. Many financial advisors pushed investors into these CDs, as Stanford Group rewarded them with high bonuses for selling their products.
A number of investors are also considering individual Stanford lawsuits and arbitration claims against the brokers and financial advisors who recommended these products, as questions had been raised by some about how Stanford Group could pay 7% interest rates on investments of $100,000.