Former S.E.C. Official Represented Indicted Financier, Agency Says

Spencer Barasch, former head of enforcement for the Securities and Exchange Commission in Fort Worth, Tex., is being investigated by the United States Attorney’s Office and the Federal Bureau of Investigation, according to testimony on Friday by Robert Khuzami, the S.E.C. enforcement director, and David Kotz, the agency’s inspector general.

The criminal inquiry follows S.E.C. internal findings that Mr. Barasch made numerous requests after he left the S.E.C. to represent Mr. Stanford and was turned down each time.

Mr. Barasch persisted in his requests even though he directly dealt with the Stanford case while at the S.E.C. and was partly responsible for ignoring repeated red flags S.E.C. examiners raised about Mr. Stanford as early as 1997, Mr. Kotz found in a 2010 report. He eventually did provide some legal counsel to Mr. Stanford in 2006, the report found.

“We made a referral to criminal authorities,” Mr. Khuzami told a House Financial Services oversight subcommittee.

In addition, Mr. Kotz and Mr. Khuzami said they had referred the matter for investigation to the Texas and Washington bars.

Republican lawmakers called the hearing to investigate why it took the S.E.C. so long to investigate Mr. Stanford despite repeated attempts by S.E.C. examiners to bring the matter to the enforcement division’s attention.

The agency finally filed civil charges against Mr. Stanford in February 2009. He was arrested in June 2009 and criminally charged with fraud in connection with a $7 billion scheme linked to certificates of deposit issued by his Antigua-based banking company. He has denied any wrongdoing.

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