House Republicans question SEC on general counsel's conflict in Madoff probe
House Republicans want to know more about Securities and Exchange Commission general counsel David M. Becker's entanglement in Bernard Madoff's Ponzi scheme.
In a letter to SEC chairman Mary Schapiro on Thursday, four senior Republicans on the House Financial Services Committee, including Chairman Spencer Bachus (Ala.), asked whether the matter created any conflict of interest at the agency.
The trustee who is trying to recover funds for Madoff's investors has sued Becker as an heir to and executor of his mother's estate. When Becker's mother died in 2004, she held a Madoff account with a reported balance of more than $2 million, which the Becker brothers liquidated. The trustee alleges that the Beckers withdrew more than their mother had deposited in the Madoff account and that, like many other "net winners" in the Ponzi scheme, the Beckers were paid with other people's money. The trustee wants to take back more than $1.5 million of Madoff payouts.
In their letter, the House Republicans asked if Becker told anyone at the SEC about his Madoff connection when he rejoined the agency in 2009. They also asked if he formally recused himself from "from all aspects of the SEC's involvement with Bernard L. Madoff Investment Securities," and if he notified the SEC's ethics office about the matter.
"It gets to the heart of how does the SEC run itself now," Financial Services Committee spokesman Jeff Emerson said.
Also signing the letter were Reps. Jeb Hensarling (Tex.), Randy Neugebauer (Tex.) and Scott Garrett (N.J.).
In a statement, SEC spokesman John Nester said: "Mr. Becker informed the SEC Ethics office shortly after his return to the agency in 2009 about the account that was liquidated in 2005. At that time, Mr. Becker also sought advice from the Ethics office, and was advised that the liquidated account was not a basis for disqualification from participation in certain Madoff-related matters."
When Harry Markopolos, the New York accountant who tried unsuccessfully to get the SEC to see through the Madoff scam, met with Schapiro after Madoff's arrest, Becker attended. According to Markopolos's book, Becker and Markopolos did not exactly hit it off.
When Markopolos said he was going to share additional investigative leads with the Department of Justice and other authorities but not with the SEC, Becker objected, Markopolos wrote in "No One Would Listen: A True Financial Thriller."
"Maybe he simply was insulted that I had called his agency incompetent ... but whatever the reason, he was furious," Markopolos wrote.
Becker told Markopolos that, as the general counsel, he could not hear information and be put in a position where he could not do anything about it, Markopolos wrote.
When the meeting ended, Markopolos wrote, he shook hands with Schapiro and another SEC official, "but not with David Becker."