Watchdog: SEC Sued Goldman to Bury Ponzi Probe

SEC official quashed Stanford probe then sought to represent him
By Rob Quinn,  Newser Staff
Posted Sep 23, 2010 6:08 AM CDT
Financier R. Allen Stanford steps off a prison transport bus at the federal courthouse for a hearing in Houston.    (AP Photo/Pat Sullivan, file)

(Newser) – The SEC in April faced the release of a report slamming it for bungling an alleged Ponzi scheme. So what's a watchdog to do? Sue Goldman Sachs the same day, the agency's own internal watchdog told a Senate committee yesterday. Inspector-general H. David Kotz said it "would strain credulity to think it was coincidental," the Wall Street Journal reports.

The report faulted the SEC for failing to uncover alleged wrongdoing at Texas financier Robert Allen Stanford's firm despite warnings from SEC investigators as far back as 1997. Kotz told the Senate Banking Committee that Spencer Barasch, the SEC's former head of enforcement at Fort Worth, successfully quashed probes into Stanford's company several times, and then tried to represent the financier after leaving the SEC, reports the Financial Times. "Every lawyer in Texas and beyond is going to get rich over this case. OK? And I hated being on the sidelines,” Barasch said, according to Kotz's report.

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