SEC Under Fire Again in Madoff Investigation


September 21, 2011

The Justice Department has been asked to investigate a top SEC official who worked on compensation for Bernie Madoff’s victims despite having inherited a $2 million Madoff investment himself.

Yesterday, the SEC’s Office of the Inspector General (OIG) recommended that the DOJ look into whether David Becker, who was the SEC’s general counsel, violated conflict-of-interest laws. Becker and his brothers inherited the Madoff investment and closed the account shortly after their mother died in 2004. According to the OIG’s report, (PDF) Becker “participated personally and substantially in particular matters in which he had a personal financial interest,” and “the matters on which he advised could have directly impacted his financial position.”

The Wall Street Journal explains:

Mr. Becker participated in discussions about legislation that would have curbed Mr. Picard’s power to launch clawback suits to recover money from investors who withdrew more money from their Madoff investments than they put in, the report said. In the end, Mr. Becker opposed such legislation.

Mr. Becker also advised the commission on how Mr. Madoff’s victims should be compensated. [The Inspector General] is recommending the SEC redo a vote that determined the commission’s view on how victims should be compensated under the law.

Becker’s investment became public in February, when he was sued by Madoff trustee Irving Picard to recover $1.5 million in fictitious profits. But the OIG found that “at least seven” senior SEC officials previously knew about Becker’s account — including Chairman Mary Schapiro and several ethics officials. “Yet none of these officials recognized a conflict or took any action to suggest that Becker consider recusing himself from the Madoff Liquidation,” the report states.

Schapiro released a statement saying she took the OIG report “very seriously” and that she would schedule a new vote on the Madoff victims’ compensation, as recommended. She also defended Becker, saying, “I do want to state that I’ve known David for many years to be a talented, highly skilled lawyer and a dedicated civil servant who served under three chairmen.”

Becker, Shapiro and H. David Kotz, the inspector general, are all expected to testify at a congressional hearing on the issue tomorrow.

In order to foster a civil and literate discussion that respects all participants, FRONTLINE has the following guidelines for commentary. By submitting comments here, you are consenting to these rules:

Readers' comments that include profanity, obscenity, personal attacks, harassment, or are defamatory, sexist, racist, violate a third party's right to privacy, or are otherwise inappropriate, will be removed. Entries that are unsigned or are "signed" by someone other than the actual author will be removed. We reserve the right to not post comments that are more than 400 words. We will take steps to block users who repeatedly violate our commenting rules, terms of use, or privacy policies. You are fully responsible for your comments.

blog comments powered by Disqus

More Stories

New Data on Utah Police Shootings and Race Called ‘Extremely Uncomfortable’, ‘Disappointing’
Racial and ethnic minorities account for a third of the people shot at by Utah police over the past decade — despite these groups making up just a quarter of the population.
September 20, 2021
Most Minneapolis Voters Believe Crime Is on the Rise, New Poll Finds
An overwhelming majority of likely Minneapolis voters say crime is on the rise, a view strongly held by residents of every race, gender and age group across the city, according to a new Minnesota poll, our Local Journalism Initiative partner the Star Tribune reports.
September 18, 2021
Minnesota Poll: Most Minneapolis Voters Want Reform, Not Fewer Cops
A clear majority of Minneapolis voters oppose reducing the size of the city’s police force — a feeling that’s especially strong among Black voters, according to a new poll. At the same time, voters are showing support for replacing the police department with a new agency, our Local Journalism Initiative partner the Star Tribune finds.
September 18, 2021
Get the Backstory on Duterte’s ‘War on Drugs’ as ICC Green Lights Investigation into Philippines Killings
With the International Criminal Court authorizing an official investigation into Philippine President Rodrigo Duterte’s bloody “war on drugs," these two documentaries and one podcast episode offer context.
September 17, 2021