August 31, 2012 / 10:12 PM / in 5 years

Former Stanford Group president settles SEC fraud charges

WASHINGTON (Reuters) - A former president of Stanford Group Co, the defunct brokerage that used to be controlled by convicted Ponzi-schemer Allen Stanford, has settled securities fraud charges with U.S. securities regulators.

Jay Comeaux, who managed the brokerage’s Houston branch office, settled the case without admitting or denying the Securities and Exchange Commission’s findings, according to a filing that instituted administrative proceedings.

Comeaux faces a bar from the industry, and may face penalties that have not yet been determined, the SEC said.

Allen Stanford was sentenced in June to 110 years in prison for bilking investors with fraudulent certificates of deposit issued by Stanford International Bank, his bank in Antigua.

Comeaux was responsible for supervising the brokerage’s financial consultants, and received commissions of at least $1.3 million on the sales of fraudulent CDs, the SEC said.

According to the SEC, Comeaux knew that the bank wouldn’t disclose details of its investment holdings, but still used marketing material that told investors that the bank maintained a “well-diversified portfolio of highly marketable securities.”

A lawyer for Comeaux did not immediately respond to a request for comment.

The agency is expected to bring cases against several other former Stanford executives.

Reporting By Aruna Viswanatha; Editing by Tim Dobbyn

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