The Corruption Of The Revolving Door
Between 2006 and 2010, at least 219 former SEC staff appeared before their former agency on behalf of private-sector clients in 800 different matters, according to a new database created by the Project on Government Oversight (POGO) and shared with iWatch News . POGO obtained copies of the ex-SEC employees’ disclosure forms through a Freedom of Information Act request.
Once-upon-a-time, government service was … well, service. It wasn’t a stepping stone to post-government fame-and-fortune. Tea Party folks: this is Ayn Rand’s nightmare, more than anything else happening in DC. It’s government employment as a personal ladder to power and reward, not society’s outreached hand to those who have stumbled, that signals the demise of the dream of the founders.
One of the steps that is supposed to minimize the power of the revolving door is a “wait period”. For the SEC, that means any former employee who appears before the agency within the first two years of leaving the agency is supposed to file a disclosure form. I’d argue that disclosure is insufficient — a prohibition would make more sense, and Reuters reports that “SEC employees are barred by federal law for life from working on matters that they worked on while at the commission.”
Nevertheless, the disclosure requirement seems toothless. Case in point: Spencer Barasch, a former SEC assistant director of enforcement in the Fort Worth TX regional office, left the agency in April 2005 to join Andrews Kurth.
According to the SEC’s inspector general, while Barasch was still at the SEC, he played a big part in delaying and limiting the agency’s investigation of the $8 billion Ponzi scheme orchestrated by Allen Stanford (pdf). After leaving the SEC, Barasch repeatedly attempted to represent Stanford in connection with the regulator’s investigation, even though he was told by the agency’s ethics office that his previous involvement with the Stanford investigation prohibited him from doing so.
Nonetheless, the internal watchdog’s reported that in September 2006—well within two years of his departure—Stanford hired Barasch to “represent it in connection with the SEC’s investigation of Stanford.”
Barasch, who was not available for comment, never filed a disclosure form.
The SEC inspector general, David Kotz, criticized Barasch in written testimony (pdf) prepared for a congressional hearing Friday about the Stanford fraud.
The NY Times reports that Barasch is the subject of a criminal investigation that the FBI launched, ahem, after a March 2010 report by Kotz.
Don’t think that this behavior is limited to Republicans. From The Washington Post:
Until two weeks ago, Kayla Gillan was deputy chief of staff at the Securities and Exchange Commission, an agency whose duties include policing and regulating the accounting firms that audit public companies. Last week, PricewaterhouseCoopers announced that Gillan was taking a leadership role at the big accounting firm to work on regulatory issues.