By: Mark Drajem
This originally appeared on bloomberg.com, see full story
Lyle Gramley and Greg Valliere get paid to anticipate noteworthy Washington developments. They missed the one where their company was thrown into receivership.
Gramley, the former Federal Reserve governor, was a senior economic adviser for Stanford Washington Research Group. Valliere was a founder of the 35-year-old firm, which in 2005 joined the Stanford Group Co., headed by one R. Allen Stanford.
On Feb. 17, the Securities and Exchange Commission accused Allen Stanford of running a “massive, ongoing fraud” in the sale of $8 billion in certificates of deposit. Valliere promptly quit. The next week, a lawyer for the receiver escorted employees from the Washington office and locked the doors.
“This came as a complete surprise,” said the 82-year-old Gramley, a Fed governor from 1980 to 1985 who worked as a contractor for Stanford. “I feel bad about the company.”
The unit had about 20 analysts in Washington who sold research to investors on what policy makers might do concerning issues such as taxes, securities regulation and interest rates. There are a handful of such firms in Washington, and Stanford Washington has been one of the best, said Andrew Parmentier, managing partner of rival Height Analytics LLC.
“They have a sterling reputation,” Parmentier said.
Gramley and Valliere were the public faces of Stanford, appearing frequently on Bloomberg Television, CNBC and elsewhere to discuss the interplay of politics and investing. The pair said they met Allen Stanford only a few times and never suspected his Antiguan bank operated what the SEC calls a “massive Ponzi scheme.”
Stanford Washington’s analysts, who included former staffers at the Federal Communications Commission and United Nations, were ranked second among Washington policy research groups by Institutional Investor magazine last year, behind International Strategy & Investment.
