SEC Dropped the Ball on Ponzi Scam

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.