Friday, January 13, 2012

USDOJ Press Release: Former SEC Enforcer Settles Conflict of Interest Charges w/ $50,000 Fine

Former SEC Head of Enforcement for the Fort Worth Office Settles Conflict of Interest Allegations

U.S. Attorney’s Office January 13, 2012
  • Eastern District of Texas (409) 839-2538

PLANO, TX—Spencer Barasch, 54, of Dallas, and the U.S. Attorney’s Office for the Northern District of Texas have entered into a settlement agreement today resolving federal conflict of interest allegations arising from Barasch’s representation of Stanford Financial Group, announced Eastern District of Texas U.S. Attorney John M. Bales. Barasch has agreed to pay a fine of $50,000, which is the maximum civil fine amount for a violation of 18 U.S.C. 207.

According to the settlement agreement, Barasch served as the head of enforcement for the Fort Worth Regional Office of the Securities and Exchange Commission from approximately 1998 through April 2005. As head of enforcement, Barasch was responsible for the review, oversight, and approval of matters under investigation. It is alleged that during Barasch’s tenure, Stanford Financial Group made false material representations and omissions of material fact to numerous investors that caused significant financial losses to those investors. It is alleged that Barasch had substantial participation with the Stanford Financial Group investigation while at the SEC: specifically, it is alleged that in August 1998, Barasch directed a preliminary SEC investigation into the activities of Stanford Financial Group to be closed; that in December 2002, Barasch declined a referral from his examination staff to investigate the activities of Stanford Financial Group; and that in fall 2003, Barasch declined to open an investigation into the activities of Stanford Financial Group. Barasch subsequently left the SEC for private practice in April 2005.

Notwithstanding his supervisory position at the SEC and oversight of the investigation of Stanford Financial Group, which restricted him from future private representation of Stanford Financial Group before the SEC, as well as his having been verbally informed that he was unable to represent Stanford Financial Group due to a permanent conflict of interest, it is alleged that Barasch represented Stanford Financial Group in connection with SEC proceedings between September 29, 2006, and December 18, 2006, and made, with the intent to influence, a communication to the SEC. Despite his efforts, Barasch did not obtain any confidential information from the SEC.

Barasch has denied any allegations of wrongdoing.

In assessing the settlement agreement, U.S. Attorney Bales announced that: “We are committed to ensuring that former federal government attorneys and employees adhere to the rigorous ethical standards imposed upon them by law. In this instance, the SEC ethics program worked and Barasch’s misguided attempt to represent Stanford Financial Group had no lasting consequence. Even so, there must be zero tolerance for ethical missteps. Today’s settlement agreement demonstrates that we will hold those that shirk their professional responsibilities accountable for their conduct.”

This case was investigated by special agents with the FBI with the assistance of the Securities and Exchange Commission. The settlement was negotiated by Assistant U.S. Attorneys Shamoil T. Shipchandler and L. Frank Coan, Jr. with the U.S. Attorney’s Office for the Eastern District of Texas on behalf of the U.S. Attorney’s Office for the Northern District of Texas.

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