My lavish junior banking job that was too good to be true

eFC logo
Dollars.Close-up view of stack of US dollars. Cash American Dollars.

When I accepted my offer to join the investment banking division of Stanford Group Companies, I was thrilled to have landed a six-figure position as a first-year analyst and get to live in South Beach, Miami instead of Manhattan. As I began discussing my upcoming position with family and friends a few conversations stuck in my mind that planted seeds of red flags, but not the warning signs and fire alarms that would come later. I had zero premonitions of an eventual SEC shut down of the firm and the uncovering of a $9 billion Ponzi scheme that would send Sir Allen Stanford to jail for life.

Shortly after accepting my offer of a $60k salary and a $30k-$40k bonus, I called up an old family friend who had helped me get an interview at one of the big banks in New York. Needless to say, I was not offered a job at that bank. Similarly, none of my fellow Stanford analysts had received offers at big banks either, despite their Yale, Georgetown, Cornell, MIT and Emory pedigrees. Getting into banking really isn't that easy. Getting into Stanford was easier than most.

This family friend did not share my excitement for joining Stanford. He had one big concern: their senior management. "Who are these guys?,” he asked. The answer: friends of Allen Stanford and inexperienced or relatively smalltime investment bankers. Much like my fellow analysts, who may have attended good schools and looked good on paper, no big banks or competitors were fighting Stanford to hire any of these bankers.

The second conversation that caused a little hesitation for me was with an acquaintance who worked both in Miami and Washington as an economic advisor. All he would say was: "Allen Stanford is a very interesting guy. I'll leave it at that and let you form your own opinion."

Despite these odd conversations, I went ahead and started working as an analyst. Everything was great. Another red flag. It was a little too great. I moved into a fully renovated floor where everyone got a private office. A private office for a first-year investment banking analyst is unheard of. We had very few live deals: most analysts worked on one or two a year total. The rest of the time we were pitching for business and working on internal documents. We also always had to wear this stupid pin, like a fraternity.

The hours were long but pretty low-stress. They said we were building a brand. And spending a ton to do it. After my first year it was review time. Great news: instead of a $30k-$40k bonus, I received over $60k. More than my salary. The reason? Sir Allen Stanford apparently wanted to match the big banks in NYC and was willing to come out of pocket to do so during this brand-building phase.

The luxurious spending was not isolated to salaries and offices. It was the Stanford way. Stanford Financial Group sponsored PGA tour stops, Stanford One polo field in Wellington, FL, 20/20 cricket in Antigua, and the Stanford Lounge and floor seats at the American Airlines Arena in Miami. As a first-year analyst, I was often invited to sit courtside while Shaq and Dwayne Wade went for the title. Walking from my private office to my courtside seats was all part of my first year analyst experience.

I won't go into the well-documented details of how Stanford's $9 billion Ponzi scheme unraveled in the wake of the financial collapse, exposing Stanford for defrauding investors through CD's sold from his Antigua operation. But this came as little surprise to many Stanford employees who had already begun asking questions about the astronomically high 13% returns that these CDs were paying.

They were not guaranteed but they had always been paid in full. During an annual internal meeting, one of the presenters from the institutional side of Stanford Group was asked directly by a senior member of the investment banking team: "How does Stanford pay the full 13% return on the CD in a year where the market has underperformed?" The answer was an absurd: "Sir Allen Stanford is a very wealthy man and covers the difference in performance from his own finances." And then no further discussion was allowed.

Investors would talk about how the screening process was the most intensive they had ever seen. Similar stories were said about Bernie Madoff, who was arrested just a few months before the SEC came knocking on Stanford’s door. "What do I know, the company has been around for 75 years,” I thought. Then one day everyone was told to leave their offices as the SEC came and seized the computers. It was all over. If it seems too good to be true, it probably is.

***Jeremy Stevens is a pseudonym

Have a confidential story, tip, or comment you’d like to share? Contact:

Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by actual human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t).

Related articles