Ex-SEC Enforcer Settles Stanford Ethics Dispute With U.S.
Spencer C. Barasch, a former lawyer for the U.S. Securities and Exchange Commission accused of killing investigations into the business practices of R. Allen Stanford, settled a dispute with the U.S. Justice Department.
Barasch was identified in a 2010 SEC inspector general’s report as having “quashed” three probes into Stanford’s operations while head of enforcement in the agency’s Fort Worth, Texas, office, and then representing the financier before the SEC in 2006, a year after leaving the commission.
Stanford was indicted in June 2009 by a federal grand jury in Houston on 21 counts including conspiracy to commit mail and wire fraud and obstruction of an SEC investigation. He has pleaded not guilty. The counts have since been reduced to 14. Jury selection in his trial is set to start on Jan. 23.
“There must be zero tolerance for ethical missteps,” U.S. Attorney John M. Bales of Beaumont, Texas, said today in a statement. Barasch agreed to pay a $50,000 fine, according to the statement.
Barasch worked for Stanford after being told by the SEC that he couldn’t do so because of a “permanent conflict of interest,” Bales said.
He was accused of violating a federal law barring former government officials from appearing before U.S. agencies on matters in which they “personally and substantially” participated while in the government’s employ, SEC Inspector General H. David Kotz said today in a statement reacting to the agreement.
“This misconduct highlights the dangers of a ‘revolving door’ environment between the SEC and the private securities law bar,” Kotz said.
Barasch’s lawyer, Paul Coggins, said in an e-mailed statement that his client entered into an accord to avoid the expense and uncertainty of drawn-out litigation.
“At no time has he compromised his honor or ethics and we vigorously dispute any suggestion to the contrary,” Coggins said.
Barasch, who left the SEC in 2005 after a 17-year career, is now in private practice in the Dallas office of the Houston- based law firm Andrews Kurth LLP (1262L).
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