Think your CD is safe?

Stanford International Bank Said to Bar Withdrawals Amid Probe

"Feb. 17 (Bloomberg) -- Stanford International Bank Ltd., the Antigua-based affiliate of billionaire R. Allen Stanford’s U.S. investment firm, placed a 60-day moratorium on early redemptions of its certificates of deposit, people familiar with the matter said.'

"Stanford Group Co. financial advisers have told three clients that they can’t redeem CDs sold by the firm prior to their maturity date, according to the customers, who asked that their names not be used.'

"A customer in Houston, who said he has more than $2 million in Stanford CDs, said a representative told him on Feb. 11 that he’d have to wait until the maturity date to get his money back.'

"Stanford International Bank has $8.5 billion in assets and 30,000 clients, according to its Web site. It describes the CDs in its disclosure statement as traditional bank deposits. The bank says it doesn’t lend proceeds and instead invests in a mix of equities, metals, currencies and derivatives, according to its Web site and CD disclosures."

I highlighted derivatives because even CD accounts were allowed to buy them because they were rated AAA by Wall Street.

Other "safe" investments such as annuities, pension funds and money market accounts have derivatives.

Any account with any structured financial product is prone to losing the entire value represented by ownership of these structured financial products.

Knowledge of what your advisor has done with your money should be a priority. If they cannot explain, on demand, exactly what is in the accounts where they placed your money, you are in trouble. What I mean is this - if they have to get back to you, or look it up, it's because they don't know. If they don't know, they put your money in harm's way.

The downgrading of CDO's, CLO's and other derivatives has been occurring for quite some time. If your advisor was not discussing with you the dangers of derivatives a year ago, why do you trust that person now?