NCUA, left unawares by several CD broker-related scandals in recent years, set a new monitoring program aimed at allowing them to keep better tabs on credit unions' activities in the vast CD market. The move comes as regulators are still cleaning up after Bentley Financial Services, the massive Ponzi-like CD scheme that cost 120 credit unions as much as $50 million, the largest brokerage-related losses ever for credit unions. Under the new program NCUA will: require all federally insured credit unions report CD holdings on quarterly call reports; will focus on those credit unions with high CD holdings; and provide expanded examiner training on the risks of CDs.
Bentley Financial is the second CD broker for credit unions charged with fraud in recent years, following San Clemente Securities, which settled civil fraud charges with the SEC in 2000. Credit unions lost more than $12 million in that case. A federal receiver for the Bentley estate is expected to distribute checks to all investors over the next few weeks amounting to about 60% of the principal of their Bentley investments.
Meantime, Robert Bentley, owner of the rogue brokerage, was kicked out of the securities business last week by the SEC.