Bloomberg reports on June 20, 2009, that U.S. Securities and Exchange Commission lawyers had tried for at least a year to investigate R. Allen Stanford’s Antigua bank, now at the center of an alleged international Ponzi scheme, when they sought help from Leroy King, the island nation’s top securities watchdog.

King, chief of Antigua’s Financial Services Regulatory Commission, had been collecting thousands of dollars in bribes from Stanford, the SEC claimed in a lawsuit against him yesterday. In 2006, King met the Texas financier and allegedly outlined a response to keep the U.S. off track: He told the SEC that an on-site examination of Stanford’s firm showed it complied with all “applicable laws and regulations.” The U.S. regulator’s lawsuit, possibly its first to target a foreign counterpart, may help answer questions from lawmakers and investors about why the agency didn’t shut down Stanford’s offshore bank until February, following years of investigation.

It also shows the perils the SEC faces as a growing share of inquiries lead offshore, requiring help from watchdogs abroad. “It flies directly in the face of what inter-governmental cooperation is supposed to be,” said Jacob Frenkel, a former SEC lawyer now at Shulman Rogers Gandal Pordy & Ecker PA in Rockville, Maryland. “It clearly can result in substantial delays, as in this case, and even compromise the integrity of the investigation.” Stanford’s Antigua bank fraudulently sold more than $7.2 billion in certificates of deposit by the end of last year, the SEC claims. In a June 18 speech, SEC Chairman Mary Schapiro said about 30 percent of its inquiries now require help from authorities in other countries.

SEC’s Lawsuit “We can’t point to any prior examples in recent memory of the SEC suing a foreign regulator,” said SEC spokesman John Heine, when asked whether the case is a landmark...