UPDATED at 5:18 pm The head of Andrews Kurth's corporate governance and securities enforcement practice has been barred from appearing before the U.S. Securities and Exchange Commission for one year for violating federal conflict of interest rules.
Spencer Barasch, who served as associate district director in the SEC Fort Worth, Texas office’s Division of Enforcement from 1998 to 2005, billed the Stanford Group Co. for 12 hours of work for SEC-related matters in 2006, according to the agency. The company was part of the financial empire of R. Allen Stanford, who was found guilty in March of 13 counts of fraud after prosecutors accused him of running a $7 billion Ponzi scheme.
While at the SEC, Barasch allegedly took part “personally and substantially” in matters involving entities associated with Stanford. The agency permanently bans ex-employees in private practice from working on any matter that they directly participated in while at the SEC.
After Barasch left the SEC in 2005 to join Andrews Kurth in Dallas, he asked the agency’s ethics office whether there was a bar to his representing the Stanford Group Co. regarding “an inquiry” by the Fort Worth office.
The ethics office told Barasch “that he was permanently barred from working for [Stanford Group Co.] on this matter because it was the same as or substantially related to matters he participated in while a Commission employee,” according to the SEC administrative order imposing the sanctions. Nonetheless, the SEC states, the company retained Barasch’s legal services in the fall of 2006.
The Fort Worth office in October 2006 entered a formal order of investigation into the sale of Stanford International Bank’s self-styled “certificates of deposit.” Prosecutors later said Stanford lied to investors and used billions in deposits from the CDs to fund his business ventures and personal expenses.
According to the SEC, shortly after the formal investigation began, Barasch “knowingly communicated with [Fort Worth] staff with the intent to influence them,” the SEC order states. “First, Barasch attempted to obtain information from [Fort Worth] staff about the investigation of [the company]. Second, when one of the [Fort Worth] attorneys, in responding to that call, questioned whether Barasch could represent [Stanford Group], Barasch attempted to convince him that Barasch’s involvement with the [Stanford Group] matter while at the Commission was minimal.”
The staff attorney suggested Barasch contact the SEC ethics office. He did, and got the same answer again — that he was barred from representing Stanford on this matter. After that, the SEC states, he did no further legal work for the company related to the investigation.
Barasch neither admitted nor denied wrongdoing as part of the SEC settlement. In a written statement, his attorney, Paul Coggins of Lord Locke, said that "For over 17 years, Spencer Barasch served the SEC and his country with integrity and distinction, and he has carried the same high standards of ethics and achievement into private practice. In order to avoid the expense and uncertainty of protracted litigation, Spencer and the government have entered into a settlement that fully and finally resolves this matter."
Earlier this year, Barasch agreed to pay a $50,000 civil fine — the maximum penalty for such a violation — to the Justice Department for the same conduct.
The SEC order bars Barasch from appearing or practicing before the SEC for one year. After the year, he may request that the agency consider his application to resume practicing before it.