ABC's Matthew Jaffe reports from Washington: On the same day the SEC is making headlines for filing fraud charges against Goldman Sachs, the agency quietly released a new watchdog report exposing its failures to take action sooner in the Allen Stanford ponzi scheme case. Federal regulators suspected for eight years that Allen Stanford was operating a ponzi scheme but failed to launch a full investigation until late 2005, a watchdog has determined. Why? Because one regional enforcement boss at the Securities & Exchange Commission argued against charges against Stanford – and then after leaving the agency tried to represent him. David Kotz, inspector general for the SEC, said in a new report that Spencer Barasch, the former head of the SEC’s Fort Worth Enforcement office, argued against the SEC bringing a case against Stanford during his time at the agency – and then, after leaving the SEC, Barasch represented Stanford in an effort to fight the agency’s case. “The former head of Enforcement in Fort Worth, who played a significant role in enforcement decisions over the years to quash investigations of Stanford, sought to represent Stanford on three separate occasions after he left the Commission, and in fact represented Stanford briefly in 2006 before he was informed by the SEC Ethics Office that it was improper to do so,” Kotz said in his report. The enforcement division also believed that the Stanford case was too difficult a case, not the “slam dunk” case that employees believed were favored by agency management. “SEC-wide institutional influence within Enforcement did factor into its repeated decisions not to undertake a full and thorough investigation of Stanford,” said Kotz. In February 2009 the SEC filed charges against Stanford for orchestrating an $8 billion ponzi scheme. He is set to stand trial in 2011. SEC chairman Mary Schapiro responded to Kotz’s report by noting that “much has changed” at the agency since the actions detailed in the Stanford case. “This report recounts events that occurred at the Commission between 1997 and 2005,” Schapiro said. “Since that time, much has changed and continues to change regarding the agency’s leadership, itsinternal procedures and its culture of collaboration. The report makes seven recommendations, most of which have been implemented since 2005. We will carefully analyze the report and implement any additional reforms as necessary for effective investor protection.” The full 159-page SEC IG report on the Stanford case can be found HERE.