Fed warns that U.S. economy will get worse in 2009

Could regulators have jumped faster on Stanford CD sales?

U.S. regulators seem to have known in 2007 that something was amiss with Stanford Group Co.'s claims about the uninsured bank certificates of deposit it was selling.

Did another mega-scam slip through their net?

From Bloomberg News:

U.S. brokerage regulators fined R. Allen Stanford’s firm more than a year ago for misleading investors while selling certificates of deposit, raising new questions about watchdogs already under scrutiny for missing Bernard Madoff’s alleged $50-billion Ponzi scheme.

Stanford Group Co. was fined $10,000 by the Financial Industry Regulatory Authority in November 2007 for distributing marketing material that "failed to present fair and balanced treatment" of the risks associated with CDs.

The Securities and Exchange Commission yesterday filed a civil lawsuit calling the sales by the Houston-based firm a "massive, ongoing fraud."

"From what we know, the problem that led to the fine was a red flag," said Robert Hillman, a securities law professor at UC Davis. "If you have a red flag of this nature, then you have to do something more than simply levy a fine and close the file."

Finra spokeswoman Nancy Condon and SEC spokesman Kevin Callahan had no immediate comment.

Blogger Felix Salmon at portfolio.com notes that various reports have had the SEC investigating Stanford for months, if not longer.

Bloomberg reported in July that the SEC was probing Stanford’s CD sales.

The SEC’s outgoing enforcement chief, Linda Chatman Thomsen, said on Tuesday that the agency was moving "quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors."

Decisively, maybe. But quickly?

-- Tom Petruno

Photo: R. Allen Stanford. Credit: Lefteris Pitarakis / Associated Press

From 'Smash-Me' Madoff to Monopoly: Toys Tackle the Recession

ABC News’ Alice Gomstyn reports: In a tough economy, at least one toymaker has gone right for the jugular. Phoenix-based ModelWorks has made a Smash-Me Bernie doll -- a doll-sized doppelganger of disgraced investor Bernard Madoff, who stands accused of running the largest Ponzi scheme in history and losing tens of billions of his clients’ dollars. Incensed Madoff clients may find the $99.95 toy especially soothing -- it comes equipped with a hammer that players can use to whack the doll silly.

Smash-Me Bernie was just one of about 100,000 toys on display at the 106th annual Toy Fair, held this week in New York. ModelWorks wasn’t the only vendor paying homage to today’s economic crisis, though other exhibitors were more subtle.

We met with Hasbro, which is marketing “family game nights” with board games that cost less than $20 and new versions of its classic Monopoly game, including Monopoly City. It sells for $34.99 and allows players to build cities right on the board.

“In today’s day and age, where the economy is front and center to many families, Monopoly’s a great game because it allows people to play and negotiate and for young kids to understand what it’s all about,” said John Frascotti, Hasbro’s chief marketing officer.

There’s a limit, of course, to exactly how much the real estate-based board game will teach kids about today’s economic problems. Asked whether game play includes mortgage-backed securities, Frascotti laughed.

“No,” he said, adding the company wanted “to keep it simple.”

In other make-believe real estate news, Mattel told us that Barbie’s iconic pink Dreamhouse -- known today as the Barbie Dream Townhouse -- has undergone some nifty renovations: The home’s bathroom now includes a toilet that makes flushing noises as well as a (fake) pop-up flat-screen TV. The house sells for $149.99.

Economic slump or not, Barbie isn’t losing any of her style, promised Richard Dickson, the general manager and senior vice president of Mattel’s of Barbie Worldwide division.

“What you can’t lose when you’re dealing with today’s times, particularly in a fashion brand like Barbie, is that you can’t lose the eye candy,” Dickson said.

“What we just have to do is make sure we present the utmost best product to them that excites them at reasonable and realistic price points,” he said.

So what does Mattel consider realistic? Most of the dolls on display ranged in price from about $10 to $50.

“Barbie is all about fashion, and today it’s got to be fashion at a price,” Dickson said. “I don’t think that’s any different than any fashion brand is dealing with.”

With reports from Charles Herman and The Associated Press.

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