Counsel for Stanford Financial Withdrew Following SEC Testimony of Executive

Additional details have emerged on the chain of events that led to counsel for the Stanford Financial Group withdrawing from representing the company and disaffirming all prior statements made to the SEC regarding his former client.

The Memphis Daily News reports that on Tuesday, February 10, five representatives of the SEC took the testimony of SFG’s chief investment officer, Laura Pendergest-Holt, in the SEC’s office in Fort Worth, Texas.  Exactly one week later, the SEC charged Pendergest-Holt, CFO James Davis and Chairman R. Allen Stanford with “a fraud of shocking magnitude” that involved defrauding and luring investors with inflated claims about the company’s products including its certificates of deposit.  In between these events, SFG’s counsel, Thomas Sjoblom of the law firm Proskauer Rose, withdrew from the case and disaffirmed his prior statements.

The SEC’s testimony of Pendergest-Holt lasted nearly four hours.  Sjoblom was present during the testimony as counsel for the company.   The Daily News reports that

Whether the testimony he heard Pendergest-Holt give that day influenced an action he took the next day is unclear. But with little explanation, Sjoblom officially quit representing Stanford Financial’s affiliated companies the day after Pendergest-Holt’s testimony, according to court records the SEC filed last week along with its complaint against Stanford.

On February 11, Sjoblom reportedly gave notice to the SEC that his firm was no longer Stanford’s counsel. According to the Daily News article,

he followed that up with a Feb. 12 fax to Kevin Edmundson, the assistant regional director in the SEC’s Forth Worth office, and left a voice mail message for him the next evening.

Finally, Sjoblom typed a note on his BlackBerry to Edmundson a little after 4 p.m. Saturday, Feb. 14. It read: “Kevin, this will advise the SEC, and confirm my voice message last evening, that I disaffirm all prior oral and written representations made by me and my associates … to the SEC staff regarding Stanford Financial Group and its affiliates.”

Three days later, on February 17, the SEC filed its case against SFG and the executives.

Read the Memphis Daily News article