SEC Dropped the Ball on Ponzi Scam

    HOUSTON, UNITED STATES:  US Security and Exchange Commission employee Spencer Barasch (C), a witness for prosecutors in the Arthur Andersen, trial leaves the federal courts building in Houston, Texas, after testifying  08 May 2002. Andersen is in court for obstruction of justice for the shredding of Enron  documents.   AFP PHOTO/James NIELSEN (Photo credit should read JAMES NIELSEN/AFP/Getty Images)

    James Nielsen, AFP / Getty Images

    The conviction of Texas financier R. Allen Stanford yesterday was a long time in the making, reads a feisty Wall Street Journal editorial today: The Securities and Exchange Commission had been investigating—and ignoring—evidence that Stanford was operating a Ponzi scheme since 1997. The SEC investigated his operation in 1997, 1998, 2002, and 2004, each time concluding it was a probably a Ponzi scheme and each time failing to do anything about it. Coincidentally, the official heading many of these investigations was Spencer Barasch, a senior SEC enforcer who later went to work for Stanford. Barasch has agreed to pay $50,000 to settle Justice Department charges he violated conflict-of-interest rules, but he continues to practice law, and the SEC is still mulling whether to let him return to the commission.

    Read it at The Wall Street Journal