“This has been a dreadful experience for me,” he said of the controversy.
At a House hearing, Securities and Exchange Commission Chairman Mary Schapiro said she concurred in a 2009 SEC decision to keep Becker and his mother’s account out of the congressional spotlight.
Becker was going to represent the agency at a 2009 hearing to explain the SEC’s position on compensation for Madoff victims, but that would have called for him to make a public disclosure about the account, Schapiro said.
Schapiro said she supported an SEC staff member’s decision to send someone else to represent the agency.
Issue a ‘diversion’
Sending Becker and bringing up his mother’s account, she said, were “likely to divert attention” from the important legal issues under discussion, Schapiro said.
Lawmakers wanted to know why Schapiro nonetheless allowed Becker to work on Madoff issues, and why, as Rep. Randy Neugebauer (R-Tex.) asked, she didn’t make sure her fellow commissioners knew about Becker’s entanglement when they were voting on SEC policy.
Schapiro said it did not occur to her to notify the other commissioners. She said that when Becker first told her about his late mother’s account, she was focused on the financial crisis and the dire plight of Madoff victims, and the matter seemed far removed from the decisions the SEC was making.
Becker inherited some of the proceeds of the $2 million account and was sued last year to give back his share of bogus profits from Madoff’s giant Ponzi scheme.
In a report released Monday, SEC Inspector General H. David Kotz recommended that the Justice Department consider whether to prosecute Becker under federal conflict-of-interest law.
Becker played a key role in shaping the SEC’s position on how much money Madoff investors should be able to keep or recover in the Madoff bankruptcy, the inspector general reported. Those decisions “could have directly impacted his financial position,” Kotz said.
SEC followed Becker advice
On Becker’s advice, the SEC took the position that Madoff investors should be entitled to more than just the amount of money they deposited with Madoff; they should also be entitled to an inflation adjustment as a fairness point. As Becker explained, an investor who deposited $10,000 with Madoff in 1998 suffered a greater loss than one who invested $10,000 in 2007.
While some lawmakers faulted Schapiro’s handling of the matter Thursday, no one was calling for her to resign. The inspector general’s investigation appeared to have been less of a blow to Schapiro than some observers had expected.