Now that it is clear just how many high-level government connections Allen Stanford had, it's time for the SEC to explain why it did not investigate Stanford more aggressively. The SEC also needs to explain what it meant when it said another regulatory agency had told it to shut down the investigation.

By our count, at least five former Stanford employees told the SEC they thought Stanford was running a Ponzi scheme, from 2003 on. (The FT revealed a new one this evening--see below). The SEC began an investigation in 2005, but didn't do anything until 2009--several months after Bernie Madoff and a week after someone else alleged publicly that Stanford was a Ponzi scheme.

So what happened to the complaints of all these whistleblowers? Did the SEC do anything about them? Did they just get lost in different parts of the bureaucracy?

Or, more disturbing, did one of Allen Stanford's connections tell the SEC to back off?

Mary Schapiro wasn't running the SEC when it muffed this latest scam, so she can blame it on her predecessor. But it's time we learned what, if anything, the SEC did during its investigation of Stanford, why it took four years to get anywhere, and why the complaints of so many whistleblowers were ignored.

Here's the latest employee tale, from the FT:

A whistleblower contacted US regulators more than five years ago with allegations that Sir Allen Stanford’s businesses were involved in an “illegal Ponzi scheme”, the Financial Times has learnt, raising new questions about why authorities waited until last week to shut down the alleged $8bn fraud.

Leyla Basagoitia, a former Stanford employee, raised a series of red flags about the tycoon’s empire in a 2003 employment dispute with her company at a tribunal run by the finance industry’s self-regulatory body. Ms Basagoitia also alerted the US Securities and Exchange Commission at about the same time, her lawyer said, echoing criticisms the agency ignored early warnings about the alleged $50bn Ponzi scheme run by Bernard Madoff.

Ms Basagoitia told an arbitration panel at the National Association of Securities Dealers in October 2003 that she suspected that Stanford Group Company, one of Sir Allen’s key businesses, was “engaged in a Ponzi scheme to defraud its clients”, according to case documents seen by the FT. In 2007, the NASD became the Financial Industry Regulatory Authority, which has come under scrutiny since the Stanford allegations emerged.

In a nine-point critique, Ms Basagoitia pointed to many concerns cited last week by the SEC in its charges against Sir Allen’s businesses, including allegations about the lack of a credible auditor, misselling of investment products and the promise of consistently high returns that did not “correspond to the reality of the markets”.

And here are descriptions of three other ex-Stanford employees who alleged the same thing.