Firm targeted by SEC has local affiliate

The Baltimore Sun

Stanford Financial Group, the Texas-based investment house accused of "massive fraud" by federal authorities, recently opened a Baltimore affiliate that manages money for area nonprofits such as the Park School and Loyola College.

Nine financial advisers and analysts left Smith Barney's Lutherville office and set up business in December as Stanford Institutional Consulting, bringing along nonprofits with endowments to manage and other clients.

Although the Securities and Exchange Commission says billions are missing from Stanford Financial, there was no indication yesterday that the alleged fraud there had affected Stanford Institutional clients.

The situation was still unfolding yesterday. A woman who answered the phone at Stanford Institutional said the firm would eventually address the numerous inquiries it has received.

Christopher C. Aitken, Stanford Institutional's executive managing director, was in meetings all day and unavailable for comment, she said. So was Stephen L. Thacker, a Stanford Institutional managing director.

Many of the assets that Aitken's group has recommended are held by third parties, not Stanford Financial or Stanford Institutional, say clients and brokers familiar with the firm.

"Christopher Aitken and Stephen Thacker are advisers of ours and have been for six years," said Courtney M. Jolley, a Loyola spokeswoman. "But all of the assets that they have been advising us on are actually housed with Charles Schwab, and we are not worried about the safety of the assets."

Likewise, a Park School spokeswoman said the assets recommended by Aitken's group were in a non-Stanford custodial account.

Investment consultants like Stanford Institutional typically work as middlemen, steering assets from foundations and pension funds to outside money managers in return for a portion of the fees.

The former Smith Barney professionals announced their affiliation with Stanford Financial Dec. 17, saying they would serve individual and institutional clients worth $10 million to $1 billion.

Aitken and Thacker are well known in Baltimore finance. Aitken has been ranked among Barron's "Top 100 Financial Advisors" and frequently speaks to large groups.

Sir R. Allen Stanford, the Stanford Financial chief whom the SEC has accused of "massive fraud," said the Baltimore group would help Stanford Financial "build a top-notch portfolio of institutional and wealth management services," according to a news release at the time. Allen Stanford's whereabouts were unknown late yesterday.

On Tuesday the SEC alleged that Stanford Financial defrauded clients out of as much as $8 billion by selling certificates of deposit that were incapable of delivering the high returns they promised. The agency also said Stanford Financial sold mutual funds based on false historical performance figures.

Meanwhile, President Barack Obama's campaign fund moved yesterday to distance him from the burgeoning scandal, donating the value of Stanford's $4,600 campaign contribution to a Chicago charity.

Obama was on a long list of Washington politicians and political committees that took money from Stanford. Other recipients, including Sen. John McCain, also promised yesterday to return the funds or donate them to charity. Stanford was a fixture in the Washington political establishment and a generous contributor to Democrats and to key Republicans as well.

Yesterday, depositors tried in vain to withdraw savings from Stanford Financial offices in Texas, Mexico, Antigua and elsewhere, wire services reported. The company has many operations in Antigua, whose government knighted Allen Stanford.

The Los Angeles Times contributed to this article.

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