The Report details the abysmal failure of the SEC’s Fort Worth District Office Enforcement Branch to publicize and stop Stanford Group Company’s Ponzi Scheme, despite numerous warnings from the same Office’s Examination Branch. The Journal rightfully notes that the SEC’s failure was even greater here than in the Madoff case, because here the warnings were consistent, forceful and coming from within the Commission’s own ranks.

     Reading the the pitiful regulatory record contained in the OIG Report reminds me of my days investigating and prosecuting Savings & Loan Fraud in the early 1990s for the U.S. Attorney’s Office in the Western District of Texas. We were consistently faced with historical fraud that was identified by conscientious bank examiners and ignored or downplayed by their regulatory superiors.

There were two brief but good stories on the Report, however, by Zachary Goldfarb of the Washington Post and Michael R. Crittenden and Kara Scannell of the Wall Street Journal. Here is Goldfarb’s piece and here is Crittenden-Scannell’s.

I haven’t read the Report, but according to the stories, on-the-ground SEC examiners in the Fort Worth District Office’s Examination Branch found evidence of a Ponzi scheme as early as 1997, and concluded on four separate occasions that Stanford’s businesses were fraudulent. They were essentially ignored by the Fort Worth District Office’s Enforcement Branch. One such Enforcment Supervisor, Attorney Spencer Barasch, repeatedly quashed probes into Stanford, but later attempted to represent him in front of the SEC. According to the Journal, the IG has referred Mr. Barasch for possible bar disciplinary action.