Louisiana financial regulators were ordered Tuesday by state District Judge Mike Caldwell to open records of their handling of Stanford Trust Co. to attorneys for investors who lost savings to Houston promoter Robert Allen Stanford’s firms.

The state Office of Financial Institutions cannot withhold records labeled as “work product,” Caldwell ruled. Officials also cannot withhold records related to their “deliberative process” in the Stanford case, which federal authorities say cost approximately 25,000 investors in more than 100 countries more than $7 billion.

Caldwell also said OFI officials cannot use the shield of attorney-client privilege to withhold records about the Stanford case unless those documents actually relate to attorney advice on how to prepare for litigation or proceed with it. OFI officials who also happen to be attorneys simply cannot be copied on e-mails and letters as a means of hiding those records from public scrutiny, the judge said.

In a related matter, a Stanford whistleblower’s testimony before Congress on May 13 contradicts OFI’s court filings in the Baton Rouge case.

Caldwell’s complicated case revolves around investor allegations that OFI and SEI Investments Co., of Pennsylvania, ignored evidence of massive fraud.

SEI, hired by Stanford Trust for accounting and reporting services, has denied those allegations.

OFI has stated that it had no duty to protect investors from risk and that its officials didn’t receive fraud allegations against Stanford’s widespread programs until the Securities and Exchange Commission shut his businesses down in February 2009.

Stanford, 61, has been in federal custody since June 2009, when he was indicted in Houston for allegedly planning the gigantic fraud.

Phil Preis, a Baton Rouge attorney for scores of Stanford investors, estimates that as much as $1 billion was lost by Louisiana residents who allowed retirement savings at Stanford Trust to be assigned as certificates of deposit for Stanford International Bank on the Caribbean island of Antigua.

Preis and law partner Chuck Gordon have argued in court filings that OFI had a responsibility to protect the interests of those investors.

In documents filed with Caldwell in March, however, attorneys for OFI argued federal law prohibited the state agency from reviewing the certificates of deposit before they were issued by Stanford International Bank. Only after those securities were sold by advisers for Stanford Group Co. and placed with Stanford Trust for management did OFI’s responsibility begin, the agency’s attorneys argued.

“OFI’s only authority with respect to those securities was to enforce its anti-fraud statutes had it become aware of fraud, deceit or other unlawful conduct,” wrote those attorneys, David M. Latham, Keary L. Everitt and Marie G. Everitt.

The Louisiana Attorney General’s Office hired the law firm of Everitt, Latham & Pratt to represent OFI.

“OFI received no complaints regarding any of the (certificates of deposit) prior to the SEC taking action in February 2009,” OFI attorneys wrote Caldwell.

But testimony given in Washington, D.C., on May 13 by a Stanford whistleblower contradicts OFI’s statement of when it received complaints about Stanford.

Charles W. Rawl testified before the House Financial Services Subcommittee on Oversight and Investigations.

Rawl told members of Congress that fellow whistleblower Mark Tidwell joined Stanford Group Co. in 2004. Rawl said he joined Stanford the next year.

Both men became concerned by what they believed to be corrupt practices at Stanford, Rawl testified. They resigned in December 2007, he said.

Rawl testified that he and Tidwell then expressed their concerns to the Securities and Exchange Commission in January 2008.

Rawl said he then went to state Attorney General Buddy Caldwell and OFI.

“In late summer 2008, the Louisiana Office of Financial Institutions took action against (Stanford Trust Co.) by stopping the sale of Stanford International Bank (certificates of deposit) in Individual Retirement Accounts,” Rawl testified.

“Importantly, the state ordered (Stanford Trust Co.) to remove the CDs from IRAs,” Rawl added.

“We have spoken to IRA holders who attempted to place more money in the CDs in the latter half of 2008,” Rawl testified. He said those investors could not complete those transactions “because the Louisiana OFI would not allow it because of the allegations we brought to their attention.”

Judge Caldwell said Tuesday that a hearing will be held in October on the Stanford investors’ request for certification of their suit against OFI and SEI as a class action.

If granted, that certification would permit the 86 plaintiffs in the pending suit to represent all Stanford investors in Louisiana except for any who choose to opt out of the litigation.