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Thursday, March 10, 2011

Fort Worth SEC leader to Resign

Rose Romero, months after a sharp rebuke from the U.S. Senate and a scathing watchdog report, will step down in mid-April as director of the Securities and Exchange Commission's troubled Fort Worth regional office after serving five years, the agency announced Wednesday.

The SEC praised the former Fort Worth police officer and federal prosecutor for leading cases against investment frauds that netted millions in penalties, although in September she was accused of misleading a Senate committee about her office's probe of an alleged Ponzi scheme by Robert Allen Stanford.

"The many successful cases brought by the Fort Worth office are a testament to her commitment and ability," Robert Khuzami, director of the SEC's Division of Enforcement, said in a statement.

Romero did not respond to requests for comment Wednesday.

The SEC quoted her as saying: "I am blessed to have had the opportunity to work with the talented and dedicated professionals in the Fort Worth office. Their commitment to the mission of finding and prosecuting fraud has been remarkable. I will be forever grateful for their dedicated service and their unwavering support."

Although her office handled numerous cases during the past half-decade, her tenure was greatly colored by the Stanford case, which prompted criticism of the SEC for failing to uncover the alleged fraud before and after Romero took over. Sen. David Vitter, R-La., said he obtained confidential e-mails showing that the SEC created a deceptive timeline of the case to make it appear that the agency didn't learn of concerns about Stanford until 2004.

But the agency's inspector general testified that examiners first warned of possible fraud in 1997 and conducted examinations in 1998, 2002 and 2004 -- all before Romero's tenure -- concluding each time that Stanford was likely operating a fraudulent scheme. The report said SEC staff urged the enforcement branch to act but was in effect shut down. The agency moved against Stanford in 2009, three years after Romero took over the regional office, alleging the Eastern Hills High School grad defrauded investors of $8 billion.

Romero repeatedly apologized to the committee but maintained that the agency was aggressively pursing the Stanford operation.

Lawmakers asked Khuzami, who took office two days after the SEC announced the Stanford case, why no one had been fired for not acting against Stanford earlier.

"The process is under way," he said. As for a systemic failure to act, Khuzami said, "We weren't as creative as we should be," adding that operational changes and improved coordination meant that "it wouldn't happen today."

Romero told the Star-Telegram after the hearing that she had not offered her resignation. Wednesday's announcement gave no indication whether she was resigning voluntarily.

The inspector general's investigation into the handling of the Stanford case, issued last March, criticized the office for focusing on "quick hits" to pump up its case numbers instead of pursuing more complex cases that would tie up resources.

It also criticized Romero and one of her lieutenants for taking inappropriate actions toward two staffers who pushed for the Stanford investigation.

Conspicuously absent from the SEC's announcement of the Romero departure was any mention of the Stanford case. Instead, it praised Romero for helping win $137.9 million in penalties from a Swiss firm and multimillion-dollar penalties in other cases. During her tenure, the SEC successfully mounted a case against a former Perot Systems employee who made $8.1 million trading on insider information about Dell's planned takeover of the Dallas firm.

The SEC said Romero plans to practice law in the private sector.

The local office suffered a raft of embarrassing episodes involving career staff members during Romero's time as director, the latest surfacing publicly only this week.

One of her subordinates was among two dozen SEC employees found to have accessed pornography websites while at work, the commission's inspector general disclosed.

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