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Securities Law

SEC Inspector General Says Timing of Goldman Case Was ‘Suspicious’

Posted Sep 23, 2010 9:16 AM CDT
By Debra Cassens Weiss

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The inspector general of the Securities and Exchange Commission said Wednesday that the timing of the agency’s civil fraud case against Goldman Sachs was “suspicious.”

SEC inspector general David Kotz suggested the case may have been used to divert attention from his critical report on the agency's handling of the case against alleged Ponzi schemer Allen Stanford, Reuters and the Associated Press report.

The timing of the Goldman suit ''is certainly something worth looking into,'' Kotz testified at a Senate hearing. ''I can't give you a conclusion right now, because we're still looking at it. But I would certainly say it's suspicious.''

Kotz’s Stanford report said the SEC first suspected a Ponzi scheme in 1997, but no charges were brought until 2009. The report also said the former enforcement chief in the SEC’s office in Fort Worth, Texas, Spencer Barasch, played a significant role in quashing Stanford probes and then briefly represented Stanford as a private lawyer.

Barasch is a partner at Andrews Kurth; the law firm maintains Barasch acted properly and did not violate conflicts of interest.

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