WASHINGTON (Reuters) - federal criminal authorities are investigating whether a former U.S. securities regulator represented alleged fraudster Allen Stanford inappropriately after leaving the Agency in 2005.
Spencer Barach, former responsible for the application of the U.S. Securities and Exchange Commission in Fort Worth, Texas, is being probed by the U.S. Attorney Office and Federal Bureau of Investigation, SEC enforcement Director Robert Khuzami and SEC Inspector General David Kotz said legislators of Friday.
Criminal probe following dry internal findings that Barach requested several times after leaving the SEC to represent the Stanford and has declined each time.
Barach persisted in its demands, although he dealt directly with Stanford issues while the SEC and was partly responsible for ignoring repeated red flags SEC examiners raised regarding Stanford, 1997, Kotz found in a report by 2010. It more later later had provided some lawyers at Stanford in 2006, the report.
"The rules clearly prohibited from... in my opinion, representing Mr. Stanford," Khuzami said a Sub-Committee of monitoring Services financial House Friday. "We have a reference to the criminal authorities."
In addition, Kotz and Khuzami said that they had also remitted the matter for investigation to the bars in Texas and Washington.
Republican legislators called the hearing to investigate why it took the SEC so long to probe Stanford, a Texas financier, despite repeated attempts by SEC examiners to bring the issue to the attention of the division of the application of the Act.
Finally, the agency filed civil charges against Stanford in February 2009. Stanford was arrested in June 2009 and criminally accused of fraud in connection with a $ 7 billion plan related to the certificates of deposit issued by its banking company based in Antigua. Stanford denied any wrongdoing.
REVOLVING DOOR
After leaving the SEC, Barach became a partner at the law firm of Kurth Andrews. In response to an inquiry from Reuters earlier this week, Andrews Kurth Managing Partner Bob Jewell said that Barach had not done anything wrong.
"We disagree with the characterization of the participation of Mr. Barach advanced by the Inspector General in his report to last year," he said. "We believe that he acted correctly in its contacts with the Securities and Exchange Commission and Stanford Financial Group. It does not violate the conflict of interest. ?
Testimony on Barach came the day of the project on the monitoring of Government, a Government watchdog group, has published a report on the "revolving door" for sec. He found that 219 former officials to the SEC left since 2006 to help clients with business before the Office.
Federal laws place restrictions on the many SEC and other government employees, once back to the private sector. In addition to a cooling of one year, out of time, they are generally prohibited to represent a client before a government agency on any matter which they were personally involved and substantially.
Some legislators say more stringent policy are needed.
Republican Randy Neugebauer, the Chairman of the Group of experts, said that Barach represented a client before the SEC in legal matters as early as Friday.
"One of the things that we hope out of this is there are a few more stringent rules," he said. "" "". It is obviously very alarming. ?
(Sarah n. Lynch reports; editing by Tim Dobbyn and Andre Grenon)
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