Spence Barasch knows. You’ll remember that the SEC barred him for a year from appearing and practicing before the Commission for violating federal conflict of interest rules.
Barasch was an associate director in the SEC’s Fort Worth office from 1998 to 2005, and according to a 2012 order, took part “personally and substantially” in an investigation into Allen Stanford and his Stanford Group Company. According to the SEC’s order, when Barasch joined a private law firm in 2005, he contacted the Commission’s Ethics Office about whether he could represent Stanford Group Company and was told that he was permanently barred from doing so with respect to any matters on which he had participated while at the Commission. The order found that Barasch declined to represent Stanford Group Company then, but that in the fall of 2006, accepted an engagement from the Stanford entity and billed it for 12 hours of legal work related to Stanford matters Barasch had participated in while at the Commission.
The SEC found all of this to be a violation of 18 U.S.C. § 207(a)(1), and that the violation constituted “improper professional conduct” under Rule 102(e)(1)(ii) of the Commission’s Rules of Practice. Barasch paid $50,000 to the Justice Department to account for the violation, and in May 2012 the SEC barred him from practicing before the Commission for one year.
But on September 5, the SEC readmitted Barasch to practice before the Commission. Barasch’s experience indicates how difficult being barred under Rule 102(e) can be for a lawyer or accountant who gets caught in the SEC’s crosshairs. He was technically barred for one year, but really the 2012 order allowed him to reapply after one year, which he did. It was another three months before the SEC actually got around to reinstating Barasch. Also, under Rule 102(e)(3)(i) the SEC, “with due regard to the public interest and without preliminary hearing,” may temporarily suspend any attorney or accountant who has been subject to a permanent injunction against violating the securities laws. An appeal can obviously follow, but recovering from that initial order is not easy. Better to stay out of that meat grinder in the first place.