Republicans question SEC official's tie to Madoff
Friday, February 25, 2011
The revelation this week that the top lawyer at the Securities and Exchange Commission inherited an investment account that was run by Bernard Madoff has House Republicans asking questions.
In a letter sent to SEC Chairman Mary L. Schapiro on Thursday, four senior Republicans on the House Financial Services Committee, including Chairman Spencer Bachus (Ala.), asked a series of questions that appeared to explore whether the matter created any conflict of interest for the agency.
SEC General Counsel David M. Becker raised the issue when he rejoined the agency in 2009, and the SEC ethics office told him that the fact that he and his brothers had inherited a Madoff account did not prevent Becker from participating in the SEC's work on "certain Madoff-related matters," SEC spokesman John Nester said.
The SEC went on to file friend-of-the-court legal briefs weighing in on questions that involve how much money Madoff's investors might recoup. Becker signed one of the briefs. It is not clear whether or how the positions the SEC staked out could affect Becker.
The trustee 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 in 2005.
The trustee alleges that the Beckers withdrew more than the family had deposited in the account and that, like many other "net winners" in the Ponzi scheme, they were paid with other people's money. The trustee wants to take back more than $1.5 million of the Beckers' payouts.
In their letter, the House Republicans asked whether Becker told anyone at the SEC about his Madoff connection when he rejoined the agency in 2009, shortly after Madoff's investment business was exposed as a multibillion-dollar fraud. The House members also asked whether Becker formally recused himself "from all aspects of the SEC's involvement with Bernard L. Madoff Investment Securities" and whether he notified the SEC's ethics office about the matter.
Staff researcher Alice R. Crites contributed to this report.