SEC chairman: Former general counsel should not have worked on Madoff fallout
Friday, March 11, 2011
Securities and Exchange Commission Chairman Mary L. Schapiro said Thursday that, in hindsight, former general counsel David M. Becker, who inherited part of a Bernard Madoff investment account, should have stayed out of the agency's work on the Madoff bankruptcy.
Responding to criticism that she mismanaged a conflict of interest by allowing Becker to participate in the matter, Shapiro testified that she relied on Becker, an experienced lawyer, to handle any ethical issues after he told her about the account in 2009.
"Do I wish now that he had been more sensitive to the potential of this issue to raise an appearance of a conflict? Yes, I wish it hadn't happened," Shapiro said.
"I wish that Mr. Becker had recused himself, absolutely," she added.
Lawmakers, especially Republicans, were waiting to grill her on the issue at a hearing convened by two subcommittees of the House Committee on Oversight and Government Reform.
A pair of banners behind the dais telegraphed their message: "Can American taxpayers trust today's SEC to manage itself and do its job?" and "Is Wall Street's watchdog competent and impartial?"
Oversight Committee Chairman Darrell Issa (R-Calif.) said the Becker affair "could be the greatest challenge to the SEC's credibility since Bernie Madoff managed to dupe so many Americans, steal so much money with his Ponzi scheme, and escape the proper scrutiny of the SEC for so long."
The committee's ranking Democrat, Rep. Elijah E. Cummings (Md.), said he, too, was troubled by the matter. Cummings said it left every decision Becker made suspect.
Schapiro promised the SEC would learn from the experience.
"I've worked so hard the last two years to try to put this agency back on the right path and to earn the trust of the public, and you're right, a small thing like this, not so small thing . . . can really set us back, and it's not fair to 3,800 hardworking employees," she said.
Becker was invited to testify at the hearing but declined because his family had previously scheduled a trip, an attorney for Becker said Wednesday.