In those two years, Young says his life has been put on hold as the cloud of the Securities and Exchange Commission probe has overshadowed his attempts to move on professionally.

MGL Consulting, where he is currently chief executive officer, has lost 20 percent of its clients, filed for bankruptcy and had regulators kill the firm's expansion plans - all driven by the stigma of the probe, Young says.

In his first media interview since the discovery of Allen Stanford's $7 billion Ponzi scheme in 2009, Young and his attorney told Reuters they believe the SEC's stalling has unfairly denied him his right to due process.

"Professionally, (it's like) wearing the stigma of the red S on your chest," Young said.

Allen Stanford was sentenced in June to 110 years in prison for bilking investors with fraudulent certificates of deposit issued by his Stanford International Bank in Antigua.

Since then, the SEC has continued to build cases against four executives and at least three lower-level financial advisers who worked for Allen Stanford's U.S. brokerage, Stanford Group Co, according to public records and people familiar with the matter.

But legal disagreements among SEC officials and recusals by some of the commissioners have fueled delays that have left both the potential defendants and the victims of Stanford's Ponzi scheme in limbo.

The SEC has postponed a vote on the cases multiple times, even though it has been 25 months since Young first received a "Wells notice", which indicates the SEC plans to recommend charges and gives the defendant the chance to rebut them.

The 2010 Dodd-Frank law gave the SEC six months to make a final decision after sending a Wells notice, but SEC lawyers can seek extensions, which they have done in Young's case.

Prior to Dodd-Frank, there were no specific time limits. The provision was included in the law to speed up SEC cases that could otherwise drag on for years.

"Their behavior is reprehensible," said Young's attorney Randle Henderson, referring to the SEC commissioners.

SEC spokesman John Nester declined to comment on the investigation, but said: "As a general matter, recusals prevent even the appearance of partiality in Commission deliberations, and to suggest they delay cases sounds like wishful thinking."

Victims of Allen Stanford's Ponzi scheme also expressed frustration with the delay, but for a different reason. They argue that former Stanford employees could dupe new investors.

"There are other investors who continue to be exposed to a lack of protection because of inadequate enforcement by the SEC," said Angela Shaw, founder of the Stanford Victims Coalition. "They should have immediately taken these guys' licenses."

MGL Consulting formed a compliance partnership in July 2009 with Complinet, a unit of Thomson Reuters.

RECUSALS, DISAGREEMENTS, DELAYS

Of the four executives, Young is perhaps the most well-known because he was previously a regulator with the Dallas office of the National Association of Securities Dealers (NASD), or what is now the Financial Industry Regulatory Authority (FINRA).

At the time he worked there, SEC Chairman Mary Schapiro and Democratic Commissioner Elisse Walter were high-ranking officials at NASD.

According to Young's attorney and documents reviewed by Reuters, the two were involved in a decision to remove Young from his position at NASD in 2003.

Both have since recused themselves on Young's case, leaving only three commissioners to make a decision. Delays were later exacerbated after one commissioner departed in August 2011, and was not replaced until November.

Agency lawyers have also disagreed over how much due diligence the potential defendants should have conducted before selling the CDs, and whether lower-level financial advisers could be liable if they relied on senior management.

People familiar with the SEC's thinking say the agency is leaning toward dropping charges against the lower-level people, but still bringing cases against the four executives.

The four executives are Young; Jason Green, the former Louisiana branch manager who later oversaw parts of the private client group; former Stanford Group Co president Daniel Bogar; and former Houston branch executive director Jay Comeaux, these people said.

Dan Hedges, an attorney for Comeaux, said his client hopes to reach a settlement with the SEC.

John Kincade, a lawyer for Green, declined to comment. In testimony during Stanford's criminal trial, Green acknowledged being under investigation by the SEC, but said he was "hopeful" the SEC would not bring its case.

Tom Taylor, a lawyer for Bogar, said his client is trying to be patient and recognizes that the case is complex.

"I'm not totally surprised it has taken a long time, I'm glad they are being deliberative about it," he said. "We'd like to think the more they think about it, the more they believe they shouldn't proceed against our client."

The SEC's latest 180-day extension on the case is set to expire in September. The SEC could take a vote soon, people familiar with the matter said.

YOUNG'S STORY

Young was on the 12th floor of Stanford's Houston office when he says he first learned the truth about Allen Stanford's fraudulent CDs.

It was February 17, 2009. Bogar had just convened an emergency meeting with Young and other Stanford executives.

Just a week prior, Young said Bogar had told him there was a "problem" with the CD disclosure documents, but Bogar had refused to provide any details. Young hoped the meeting would shed more light.

He was unprepared, however, when Bogar told the group that the Stanford International Bank portfolio consisted of at least $1.6 billion in personal loans to Allen Stanford, Young said.

"The reactions around the room were just as you can imagine. Oh-my-God," Young said. "People on the phone broke down crying."

As the group of executives left the conference room to take a small break, the office was raided by federal agents.

Helicopters flew overhead and TV cameras were already set up. He says everyone was told to go back to their desks, take their car keys and leave everything behind - even their morning coffee.

It was not until roughly one year later, he says, that the SEC came knocking. Two SEC staffers met him in a Houston hotel conference room armed with binders they said contained evidence that Young's actions had led investors to think incorrectly that their deposits were insured.

He said the SEC demanded an industry bar and a fine he could not possibly afford. "If that's what they want, I've got nothing to lose," Young said. "We're going to fight back and we're going to fight back hard."

Young said he received the SEC's Wells notice in June 2010, and faced potential charges that he failed to conduct due diligence and misled investors about insurance coverage.

Young's lawyer said the knowledge of the fraud was limited to a handful of people at the top and that Young did everything he should have done.

To perform his due diligence responsibilities, Young met with compliance officials for Stanford's international bank in Antigua, according to documents reviewed by Reuters that were submitted to the SEC in Young's defense.

He reviewed quarterly financial statements, studied Antiguan laws and regulations, and read annual reports outlining the bank's financial performance, he says in the documents.

Senior bank officials told him, however, that privacy laws prevented him from obtaining detailed information about the investment portfolio. As such, he relied on the "experience and expertise" of the legal and compliance departments of the bank to help fulfill his duties.

Since the 2009 collapse of Stanford's business, Young has replayed the events in his mind, retracing his steps.

"I asked myself, 'What did I miss? How did I miss it?" Young recalled. "If there is such a thing as a ... perfect scam, this was the perfect scam."

(Editing by Tim Dobbyn and Dale Hudson)

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