(Bloomberg News) David M. Becker, the former chief Securities and Exchange Commission lawyer being sued for inheriting money linked to Bernard Madoff's Ponzi scheme, said he didn't recuse himself from Madoff-related matters at the SEC on advice from the ethics counsel.
Becker, whose latest two-year stint as the SEC's chief counsel ended February 25, wrote the same day in a letter to U.S. House Republicans that he had consulted with the SEC's ethics counsel at least twice about work related to Madoff. He said he had no recollection of having any contact with the imprisoned money manager.
Becker, 63, and his brothers inherited about $2 million from his parents' Madoff account after their mother's death in 2004. Irving H. Picard, the bankruptcy court trustee unwinding Madoff's business, is seeking to recover about $1.5 million, which he alleges is fraudulent profit.
In one instance in May 2009, Becker wrote, "it was conceivable" that a decision faced by the SEC could have affected legal moves by the Madoff trustee. The agency was asked by lawyers representing Madoff investors to consider an interpretation of the Securities Investor Protection Act that "could affect the trustee's decision to bring clawback actions against persons like me," Becker wrote. He said the ethics counsel cleared his involvement, deciding it wouldn't have a "direct and predictable effect" on the trustee's actions.
"The Ethics Counsel also concluded that a reasonable person with knowledge of all of these facts would not question my impartiality," Becker wrote.
When Becker previously served as general counsel from 1999 to 2002, he worked on "issues relating to payment for order flow" that affected Bernard L. Madoff Investment Securities, but were "not related to Mr. Madoff's Ponzi scheme," Becker said.
About the time he returned to the agency in 2009, Becker informed Chairman Mary Schapiro and William Lenox, then the agency's ethics counsel, about his mother's account, he wrote. Becker said the counsel told him that possible enforcement actions against Madoff "did not have a direct and predictable effect on my financial interests." Becker said he "remained aware that specific matters could require recusal."
John Nester, a spokesman for the SEC, declined to comment on Lenox's advice to Becker.
Becker's letter was in reponse to a February 24 letter to Schapiro from House Financial Services Committee Chairman Spencer Bachus and other committee members. The lawmakers also asked why the SEC didn't publicly disclose Becker's family links to the Madoff funds. Becker answered in his letter that "no one specifically considered the issue," and it didn't apparently violate any public-disclosure rules.