In Dallas Federal Court, Those Swindled by Allen Stanford Sue SEC For Failing to Stop Him
Spencer Barasch is a partner at the downtown Dallas law firm Andrews Kurth, where he is in charge of the corporate governance and securities enforcement team. But before that, and for close to 20 years, he worked for the Fort Worth office of the Securities and Exchange Commission, including a tenure as head of its enforcement program. It was under his watch that Allen Stanford swindled billions out of investors.
Eleven month ago, the SEC's inspector general all but blamed Barasch for allowing the Texas financier's Ponzi scheme to prosper, insisting in a 151-page report that for years he looked the other way on Stanford's behalf. Barasch never responded, but his friends claimed he'd been scapegoated by the feds -- even though Barasch wound up doing some work for Stanford in 2006, shortly before the SEC filed charges against Pete Sessions's pal.
Yesterday, but blocks away from the attorney's downtown office, some of the investors swindled by Stanford filed a federal suit against the government, claiming that the SEC and Barasch's refusal to shut down Stanford's operation years earlier -- say, in 1997, when he first appeared on the feds' radar screen -- resulted in their pockets being picked clean. Long story short:
This complaint is filed on behalf of the plaintiffs ... who, because of the negligence and misconduct of employees of the United States Securities and Exchange Commission ("SEC"), lost their investments in Stanford International Bank, Ltd ("SIBL"). The SEC employees were at all times material acting within the scope and course of their offices and employment, and under circumstances in which their employer, the United States, if a private person, would be liable to the plaintiffs in accordance with the law of the place where their acts or omissions occurred.
SIBL and its affiliated or related companies, including Stanford Group Company (SFG), were known at all times material by the SEC to be participants in a massive Ponzi scheme, and the SEC, which has a mandate to protect the public interest, in this case had both the authority and the duty to put an end to this scheme. But for the negligent acts and omissions, misconduct, and breaches of duty by Spencer Barasch, a former SEC regional Enforcement Director, the negligent supervision of Barasch by his SEC supervisors, and other inexcusable acts of negligence by SEC employees, the plaintiffs would not have made, and lost, their SIBL investments, as the following facts, and admissions by the SEC, show.
The entire suit filed at the Earle Cabell, which includes a recap of the 2010 report, follows.
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