Montag, 29. November 2010

SEC Eyed for Negligence in Enforcement Cases

November 29, 2010
By Rachelle Younglai
A federal watchdog is investigating whether a senior Securities and Exchange Commission official bungled an examination associated with a "major" investment adviser enforcement case in 2009.

The senior official at one of the SEC's regional offices allegedly told staffers not to pursue certain red flags in an investment adviser examination, according to a report by SEC Inspector General David Kotz.

Kotz's semi-annual report to Congress, released on Monday, did not identify the senior official, the regional office or the major enforcement case.

The senior official was motivated to cover up his tracks because he was deeply involved in the prior examination that did not uncover the fraud, according to an internal complaint received by Kotz.

The report from Kotz comes as the SEC continues to rebuild its reputation after the regulator was blasted for missing Bernard Madoff's epic fraud despite numerous tips and complaints.

The SEC declined comment. Kotz would not elaborate further.

According to the report, the complaint also alleged that a hostile work environment existed in the regional office because management failed to discipline the senior official after it was revealed that he had viewed porn on a SEC computer.

According to the report, Kotz is still eyeing allegations that the enforcement division was negligent in an investigation of an insider trading case. Among other things, Kotz is also probing allegations that SEC staff failed to properly investigate a prominent law firm for obstructing an ongoing case.

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Mittwoch, 10. November 2010

SEC Did Nothing to Stop Stanford Ponzi Scheme for Years

November 10, 2010
By Jack Kelly
Newly released documents detail 12 years of fits and starts at the Securities and Exchange Commission as financier Allen Stanford was allegedly running a global Ponzi scheme.

At one point, an SEC official laments in an e-mail, "Before I retire, the Commission will be trying to explain why it did nothing." The e-mail from Fort Worth, Texas, Regional Office Assistant Director Julie Preuitt was written in 2004. The agency did not move in on Stanford until 2009.

The documents are exhibits in a scathing report issued in March by SEC Inspector General H. David Kotz. His investigation found SEC staffers were aware of potential problems at the Stanford Financial Group as far back as 1997, but that the SEC's Enforcement Division repeatedly declined to take action. The agency released the exhibits Tuesday after repeated requests by CNBC under the Freedom of Information Act.

Kotz's investigation also found the SEC's former enforcement chief in Fort Worth, Spencer Barasch, repeatedly sought to represent Stanford after leaving the agency, even after being told by the SEC's ethics office that he could not.

The exhibits show Allen Stanford himself pushed for Barasch's hiring. With SEC investigators bearing down on the company in 2006, Stanford wrote in an e-mail to Chief Financial Officer James Davis and General Counsel Mauricio Alvarado, "The former SEC Dallas lawyer we spoke about in St. Croix. Get him on board asap."

SEC officials blocked Barasch from representing Stanford, but the documents show Barasch billed Stanford for work done in 2006. He sought to represent Stanford again after the SEC lawsuit in 2009, but officials again ruled he had a conflict of interest. According to a transcript released Tuesday, Kotz asked Barasch about the 2009 request, and Barasch replied, "Every lawyer in Texas and beyond is going to get rich over this case. Okay? And I hated being on the sidelines."

Barasch, who has not been charged with wrongdoing, has not responded to previous requests for a comment about any role he may have played in the Stanford affair.

The documents show Allen Stanford's attempts to exert his influence may have extended beyond the SEC. In a 2004 e-mail exchange with the subject "Stanford - Call to Federal Reserve," SEC officials contemplate the fact that someone at Stanford - the name in the e-mail is redacted - had contacted someone at the Federal Reserve, whose name is also redacted.

The SEC staffers conclude there is nothing they can do about the development, which leads Assistant Regional Director Preuitt to write, "I love this stuff. We all are confident that there is illegal activity but no easy way to prove. Before I retire, the Commission will be trying to explain why it did nothing. Until it falls apart all we can do is flag it every few years." The e-mail is dated October 25, 2004.

By then, officials in Fort Worth had been looking into issues at Stanford Financial for years. In 1997, examiners found evidence of "possible misrepresentation and misapplication of customer funds," according to one of the newly released documents. The report noted that Stanford himself had made a $19 million cash contribution to the company in 1996, and "We are concerned that the cash contribution may have come from funds invested by customers in (Stanford International Bank)."

The report was referred to the Enforcement Division, which ultimately chose not to pursue the matter. Among those who made the decision: regional enforcement chief Spencer Barasch.

The SEC released the Inspector General's report - minus the exhibits - on April 16, the same day the Commission announced a high-profile fraud suit against Goldman Sachs. That triggered charges the SEC was trying to bury the report amid the publicity surrounding the Goldman Sachs case, but a subsequent report by the Inspector General found no evidence of that.

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Montag, 8. November 2010

Allen Stanford beaten up by jail inmates

RAS-beaten November 8, 2010
By Daily Mail Reporter

Bloodied and bruised, this is the shocking picture of cricket tycoon Allen Stanford after a beating by jail inmates.

His neck in a brace, his eye bleeding and half-closed and his head bandaged.

The final humiliation for Stanford, 61, awaiting trial accused of masterminding a $7 billion fraud, was his feet and hands were shackled as he was taken to hospital.

Once he posed with a perspex case containing $20million at Lord's cricket ground, after being hailed as the saviour of English cricket.

But that counted for nothing at the private prison in Conroe near Houston, Texas, and the inmates sharing his cell.

"I was on the telephone and some of the other people in the cell didn't like it," he told a friend who visited him, according to the Sunday Times.
Attacked: The tycoon sits on a hospital trolley with his neck in a brace, his eye half-shut and a bandage wrapped around his head after the assault by jail prisoners in Texas
"They said something to me and then two of them jumped me and kept punching me and kicking me in the head."

"I lost consciousness, but at one time I came round and grabbed one of them by the leg. That just set them off a again".

The guards burst into the cell and shackled Stanford before taking him to a hospital where he underwent an operation while still chained up.
RAS-beaten Stanford suffered fractures to his eye socket, cheek bones and severe bruising to his body.

He has lost all feeling in the right side of his face. No one has been punished for the attack and he spent three weeks in solitary confinement, before being moved to another prison.

The assault happened in October last year in a cell holding 14 other men. It was designed to hold eight inmates and at the time had no electricity, air conditioning and was in virtual darkness.

The friend claimed the inmates were "on edge" with each other because of the cramped conditions.
Shackled: Allen Stanford is bound hand and foot at the hospital near Houston
Stanford, who faces 21 charges at his trial which begins in January, had made three requests to be moved to another prison.

His downfall began after he signed a deal with the England and Wales Cricket Board in June 2008 for five Twenty20 international matches between England and a West Indies all-star XI with a prize of $20 million.

He was caught flirting with the wives and girlfriends of England's cricketers and was seen to grab Emma Prior, wife of wicket-keeper Matt and pull her onto his lap before putting an arm round Alistair Cook's girlfriend.

An assessment of Stanford's health was prepared for a court by Victor Scarano, a forensic psychiatrist.

He wrote: "Mr Stanford described himself as a breathing corpse with increased episodes of despair, hopelessness and helplessness".

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