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Colombia exchange suspends Stanford brokerage

world Updated: Feb 19, 2009 21:37 IST

AP
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Colombian financial regulators said on Wednesday that they have suspended all activities of the local brokerage unit of Stanford International Bank, the object of a U.S. fraud probe. The brokerage recorded 8.8 billion pesos ($3.5 million) in losses last year, the most of 39 brokerages licensed to trade on Colombia's stock exchange, the Superintendency of Finance said in a statement posted on its Web site.

The superintendency said the brokerage unit had increased its capital in Colombia by $3 million on Monday.

Authorities said they decided to suspend activities of Stanford SA Comisionista de Bolsa to protect "clients and investors" and "preserve confidence in the stock market."

Stanford does not operate a retail bank in Colombia or sell financial products in the country, the president of Colombia's stockbrokers' association, Emilio Archila, told The Associated Press.

It merely trades shares in the stock market, he said, adding that some Stanford clients in Colombia switched brokers last week upon hearing rumors it was in trouble.

Archila said Stanford's predicament wasn't causing any anxiety or other trouble in the market.

"This doesn't originate in Colombia's stock market and so there's no reason why it would affect others," he said. The Stanford brokerage's general manager for Colombia, Alvaro Camaro, initially agreed to speak to the AP but cut short the interview, saying he had urgent business.

Camaro said Stanford bought the business, which has offices in Bogota and Medellin, nearly two years ago.

According to data published by the Superintendency of Finance, Stanford's Colombian brokerage unit had 21.5 billion pesos ($8.6 million) in capital as of the end of 2008.

U.S. authorities accuse Texas billionaire R. Allen Stanford of perpetrating an $8 billion fraud through a Houston-based holding company that includes Stanford International Bank.