Investors caught as regulators swoop on Stanford

Lawyers for the investors said they had not received Stanford documents that indicated the products were insured.

In the United States, CDs are often insured by the Federal Deposit Insurance Corp.

"Many people automatically thought Stanford CDs were insured," said William Shepherd, a partner who specializes in securities fraud at law firm Shepherd Smith Edwards & Kantas.

In recent days, Shepherd said he had fielded a flood of telephone calls from concerned investors and advised them to move their money as quickly as possible.

That advice may have come too late. Financial advisers in Stanford's offices in Louisiana, Florida and Texas told investors the money was locked up for a little while.

"One of my clients wanted to pull out $700,000 that he had invested in Stanford CDs and was told there was a 60-day moratorium on withdrawing the money," lawyer James Dunlap of Atlanta said. Even a client whose $250,000 CD matured on Feb. 9 could not get the money out, Dunlap said.

Stanford spokesman Brian Bertsch directed all questions to the SEC.

Some investors now say there had been problems in getting money out, supporting suspicions of rival investment advisers that Stanford's claims were too good to be true.

"There had been delays of three or four days in getting the money out in the past," Dunlap said, noting that Stanford had claimed technical difficulties at that time, and later made investors whole.

Other investors are ready to go to court to try and get their money back.

"We are trying to figure out what can be done in terms of a lawsuit but right now we are still getting the facts," said Houston attorney William Shepherd, who is representing some investors.

Dunlap said he was getting ready to file a lawsuit as early as Tuesday, possibly accusing Stanford of breach of contract. (With additional reporting by Martha Graybow in New York and Anna Driver in Houston; editing by Jeffrey Benkoe and Ted Kerr)