Prudential Mexico President: Stanford Probe Has Hurt Mutual Funds
25 March 2009 - 6:32AM
Dow Jones News
The president of Prudential Financial's Mexican unit said
Tuesday that the U.S. investigation of Allen Stanford for
securities fraud has hurt the Mexican mutual fund industry.
Mexico's securities regulator last week suspended the sale of
three locally traded Stanford Financial Group mutual funds,
following an investigation begun in February into whether investors
were illegally sold foreign securities by Stanford's local
unit.
"The Stanford issue has hurt us, and it has hurt us because
people said: 'Well, how do I know you aren't doing what Stanford
did?'" said Manuel Somoza, president of Grupo Financiero
Prudential, at a press conference.
Mexican law prohibits financial intermediaries from offering
foreign investments unless they are securities authorized by the
commission for sale to the public by authorized banks or
brokerages.
Stanford Fondos is authorized in Mexico to distribute Mexican
mutual funds, which are operated by a number of different local
banks and brokerages, but a number of local investors put their
money into Stanford offshore operations.
"Stanford's funds have been sold in Mexico for seven, eight,
nine, 10 years by people who came from outside and convinced
Mexican investors, who didn't understand much, by paying them
double the yield obtained in the market," Somoza said.
Mexico has about 500 mutual funds with 1.7 million clients and
assets under management around $56 billion.
-By Paul Kiernan, Dow Jones Newswires; (5255)5001-5726,
paul.kiernan@dowjones.com