February 5, 2020

Cassidy, Kennedy call for increased scrutiny over Swiss bank involvement in Stanford scheme

WASHINGTON — Sens. John Kennedy (R-La.) and Bill Cassidy (R-La.) sent a letter to Societe General Private Banking (“SocGen”) regarding its participation in the Stanford Ponzi scheme.

“Thousands of people lost everything in this scheme. SocGen’s failure to provide oversight of the Stanford accounts contributed to the victims’ losses. SocGen must make things right for the victims,” said Cassidy.

“It’s time for SocGen to take responsibility for their role and repay the thousands of victims who lost their life savings in the Stanford Ponzi scheme. We will not stop hunting down these assets, which rightfully belong to many seniors and hard-working people in Louisiana,” said Kennedy.

The letter criticizes SocGen’s failure to properly monitor Stanford-affiliated bank accounts, which were used to manage the personal assets of the Stanford group’s clientele. Although SocGen’s counsel stated there was no evidence that it knew about or participated in the Ponzi scheme, a Swiss court concluded that SocGen didn’t act in good faith when it worked with the Stanford International Bank. The Swiss Financial Market Supervisory Authority determined that, in the case of Stanford, SocGen violated its anti-money laundering responsibilities.

Kennedy and Cassidy’s offices conducted a meeting with SocGen’s legal counsel in April to discuss the litigation filed against them, yet no members of the board or management team attended.

“[B]e assured that the absence of SocGen leadership, along with the unsatisfactory and disingenuous responses we received during the course of this meeting, will only encourage our offices to continue its zealous investigation of SocGen and other financial institutions that enabled Allen Stanford and his entities to defraud investors of nearly $7 billion,” wrote Kennedy and Cassidy.

Since the meeting, the Louisiana senators have continued investigating SocGen and other financial institutions that assisted Allen Stanford and his entities in defrauding investors.

“The inescapable conclusion is there was a complete failure of due diligence and monitoring of Stanford-affiliated accounts that SocGen was obligated to conduct. Your counsel stated there was no evidence that it knew about or participated in the Ponzi scheme. Not only does that appear to be a dubious proposition, but, more importantly, the determination of the Swiss court suggests that there are systemic problems with SocGen’s anti-money laundering practices that warrant scrutiny by our offices and applicable regulatory authorities that we will be contacting,” said the senators.

Read the full letter here.