Former Securities and Exchange Commission enforcement official Spencer C. Barasch was barred Thursday from appearing before the commission for a year after violating federal conflict of interest rules.
Barasch, Associate Director of Enforcement at the commission’s Fort Worth, Tex., office from April 1998 to June 2005, was fined also fined $50,000 for taking part in legal securities decisions made by Stanford Group Company (SGC), which was owned by fraudster R. Allen Stanford, according to the SEC’s order.
When he joined a private law firm after leaving the SEC, he contacted the commission’s ethics office about whether he could represent the Texas-based Stanford Group Company and was told he was permanently barred from representing the group because of his part in earlier SEC proceedings against them. Barasch denied SGC’s request for representation at that point.
“Between 1998 and 2003, Barasch participated personally and substantially in several decisions relating to the commission’s response to allegations that various entities associated with Robert Allen Stanford, including Stanford Group Company (“SGC”), violated the federal securities laws in connection with the sale of Stanford International Bank’s (“SIB”) self-styled ‘certificates of deposit,’” the order states.
Stanford was convicted of running $7 billion Ponzi scheme that defrauded 30,000 of the bank’s investors.
In 2006, Barasch was paid by SGC for 12 hours of legal service related to an SEC inquiry. Soon afterward, the SEC began a formal investigation of SGC for a potential violation of federal securities law related to the bank’s self-styled certificates of deposit. At this point, Barasch tried to talk to the Forth Worth office about the case.
“Barasch knowingly communicated with FWDO staff with the intent to influence them,” the order states. “First, Barasch attempted to obtain information from FWDO staff about the investigation of SGC. Second, when one of the FWDO attorneys, in responding to that call, questioned whether Barasch could represent SGC, Barasch attempted to convince him that Barasch’s involvement with the SGC matter while at the Commission was minimal, and that Barasch could therefore represent SGC before the Commission.”
He was then told by the ethics office he was permanently barred from representing SGC, which prompted him to end his representation. He can reapply to appear before the SEC after the ban expires, but he must satisfy several conditions, according to the order.
