Update on NECA and ELECTRI International Investments with Stanford Financial Group
NECA and ELECTRI International learned in February that the U.S. Securities and Exchange Commission had seized the assets of Stanford Financial Group, a Houston-based financial services company. At the time of the SEC action, Stanford was managing investments for both organizations. The SEC has appointed a receiver to oversee and protect those assets.
NECA’s investments included three Stanford International Bank certificates of deposit as part of NECA’s short-term cash in its general fund. One of the CDs had matured and was in the process of being wire transferred to NECA, but the transfer was not completed before the funds were frozen. NECA has no other investments with Stanford Bank. No NECA assets, including those in its reserve fund, are being managed or have ever been managed by the Stanford Financial Group.
NECA and the foundation have retained the same attorneys and are taking similar steps to recover funds from its certificate of deposit investments. The NECA Executive Committee and ELECTRI International’s Board of Trustees have held several meetings by conference call and are fully informed and actively engaged in resolving this matter.
Rex Ferry, NECA President and Chairman of the Foundation’s Board of Trustees, has named a review committee to work with staff on vetting and selecting a new advisory firm for ELECTRI International. The Foundation’s Board of Trustees has recommended that the Foundation take immediate steps to move the balance of its portfolio (funds that are titled in name of Foundation and held in custodial account at Pershing) to new management. However, even those funds that are not part of the SEC investigation have been temporarily frozen in order to give the SEC the opportunity to do a complete inventory of all Stanford assets and obligations. The Foundation plans to move those funds as soon as they are released.
While the decease in cash in the general fund will affect NECA’s cash flow balance, it should not materially impact its normal programs and services. NECA has established a bank line of credit to handle any cash flow shortfalls. A complete review of planned expenditures has been undertaken to mitigate any longer term consequences.
The Foundation has developed a “worst case scenario” on operating plans and is analyzing all projects to structure workable cash flow scenarios. Attorneys have assured both NECA and ELECTRI International that the organizations are taking the correct steps to protect their investments.
NECA CEO John Grau and Foundation President Russ Alessi will continue to keep members and chapters informed of any new developments in this matter. Please contact John Grau, jmg@necanet.org, or Russ Alessi, russ.alessi@necanet.org if you have any additional questions.
