The trustee sued Becker and his two brothers as executors and beneficiaries of their mother's estate.
When their mother, Dorothy G. Becker, died in 2004, she held a Madoff account with a reported balance of more than $2 million, according to a court filing. The Becker brothers liquidated the account in 2005. Overall, more money was withdrawn than their mother had deposited with Madoff, the lawsuit said.
The purpose of the lawsuit is "to recover the fictitious profit" so it "can be equitably distributed among all of the victims," Picard said in the filing.
Through an SEC spokesman, Becker declined to be interviewed.
"I was not involved with my parents' financial affairs, and don't remember knowing about any investment with Madoff until after my mother's death in 2004 and the subsequent liquidation of her account," Becker said in a statement.
Asked if the Beckers would give up the money the trustee is seeking, SEC spokesman John Nester said, "He and his brothers plan to consult with legal counsel and do the right thing."
The revelation in December 2008 that Madoff was running a $65 billion fraud was an embarrassment for the SEC, which failed to see through the scam despite repeated warnings.
Madoff is serving a 150-year prison term for fleecing thousands of investors over many years. He pretended that their money was growing at a strong and steady rate, but he was actually using money from some investors to make payouts to others.
Becker worked at the SEC from 1998 to 2002 as deputy general counsel and then general counsel. He rejoined the agency in February 2009 as general counsel and senior adviser to Chairman Mary L. Schapiro. The SEC recently announced that Becker will return to the private sector at the end of February.
During his first tour of duty at the SEC, Becker had nothing to do with the agency's work on Madoff and was unaware of suspicions about Madoff, Nester said.
The New York Daily News reported on the lawsuit Tuesday night.
When Picard filed the suit against the Beckers, he did not know that David Becker was the SEC's general counsel, said Stephen P. Harbeck, president of the Securities Investor Protection Corp., which is also involved in helping to cover investors' losses.
About $10 billion has been recovered, which would cover about half of the roughly $20 billion that investors lost, Harbeck said. That estimate of the losses does not include the bogus profits reflected in investors' Madoff account statements.
The vast majority of the money recovered so far - $7.2 billion - was returned by the estate of one big investor, Jeffry M. Picower.
The trustee has sued a variety of others, including major financial institutions that did business with Madoff, alleging that they knew or should have known about the fraud. Picard has also sued owners of the New York Mets, accusing them of turning a blind eye. They have said they did nothing wrong and were betrayed by Madoff.
The trustee's pursuit of smaller investors who were "net winners" has left some feeling doubly damaged.
Steven Berk, a lawyer who represents some investors, said Picard should focus "on the evildoers and not the innocent victims."
Picard has decided not to pursue claims against some Madoff customers who are facing severe financial hardship, Harbeck said.