murray waas

The Derailment of the SEC – Part II: An SEC Official Works Both Sides of the Street, and Betrays the Public Trust

A senior Securities and Exchange Commission official, Spencer C. Barasch, quashed an investigation in early 2005 of a $7 billion Ponzi scheme masterminded by Houston financier R. Allen Stanford—after securing a lucrative partnership with a law firm of which Stanford was a client.   Barasch, the top enforcement officer of the SEC’s Fort Worth regional office at the time, overruled SEC examiners who had warned him that Stanford was likely running “a massive Ponzi scheme” and had sought permission from him to open a formal investigation of Stanford and his bank. For several months prior to that decision, Barasch had been negotiating to become a partner with the Houston law firm of Andrews Kurth, which had had Stanford as a client, according to confidential Andrews Kurth emails obtained for this story. Andrews Kurth’s work for Stanford is detailed in the law firm’s confidential billing records.                                                                                                  Federal conflict-of-interest law prohibits a government employee from participating “personally and substantially” in an official capacity in any “particular matter” that would have a direct and predictable effect on the employee’s financial interests or on the financial interests of a “person or organization with whom he is negotiating or has any arrangement concerning prospective employment.”