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

As Biden Announces End of U.S. ‘Combat Mission’ in Iraq, 21 FRONTLINE Docs Provide Context
President Biden said July 26 the U.S. combat mission in Iraq is drawing to a close. These documentaries illuminate the Iraq War and its aftermath.
July 28, 2021
THE PEGASUS PROJECT Live Blog: Major Stories from Partners
A curated and regularly updated list of news articles from our partners in “The Pegasus Project,” a collaborative investigation among 17 journalism outlets around the world.
July 28, 2021
‘A disturbing shooting’: Salt Lake County district attorney says officer was justified in killing handcuffed man
An exasperated district attorney tried to get two points across at a Thursday news conference. The first is that as the law is currently written, Longman’s shooting was justified. The second is that Gill thinks the law should be changed. 
July 22, 2021
What Is the Fatemiyoun Brigade and Why Does It Make the Taliban Nervous?
Amid the withdrawal of U.S. troops, Taliban leaders claim Iran is mobilizing its proxy militia the Fatemiyoun for civil war within Afghanistan.
July 20, 2021