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House Leaders Ask Questions About SEC General Counsel and Madoff Fraud

By Jim Hamilton

In a letter to SEC Chair Mary Schapiro, House Financial Services Chair Spencer Bachus (R-AL) asked for a response on a series of questions regarding SEC General Counsel David Becker, who is a defendant in a clawback lawsuit initiated by Irving Picard, the trustee in the Bernard L. Madoff Investment Securities liquidation. The letter was also signed by Committee Vice Chair Jeb Hensarling (R-TX), Oversight Subcommittee Chair Randy Neugebauer (R-TX), and Capital Markets Subcommittee Chair Scott Garrett (R-NJ). The SEC is asked to respond by March 4, 2011.

During Mr. Becker's first term at the SEC, including his tenure as General Counsel from 2000-2002, asked the letter, was he aware of the analysis prepared by and presented multiple times to the SEC by Harry Markopolos, which correctly alleged that Bernard Madoff was operating a multi-billion dollar Ponzi scheme. If he was aware of the Markopolos allegations, did he inform then-Chairmen Arthur Levitt or Harvey Pitt and if not, why not.

The House leaders also ask if, during Mr. Becker's first term at the SEC, he met with or had occasion to speak with Bernard Madoff and, if he did, what was discussed during these meetings or conversations.

Also during Mr. Becker's first term at the SEC, they want to know if he prepared any legal memoranda, or provided counsel to any SEC employees about any matters involving Bernard L. Madoff Investment Securities. Before Mr. Becker returned to the SEC to serve as General Counsel in 2009, said the letter, did he inform anyone at the SEC that he was the co-executor of his parents' estate that profited from the Bernard Madoff Ponzi scheme.

Further, when Mr. Becker returned to the SEC in 2009 as General Counsel, did he formally recuse himself from all aspects of the SEC's involvement with Bernard L. Madoff Investment Securities, including any meetings with the Justice Department or SIPC, Mr. Irving Picard or any Madoff victims. If so, did Mr. Becker formally document the recusal?

Further, the Committee members ask if Mr. Becker notified the SEC?s Office of Ethics Counsel of his role as the co-executor of an estate that profited from the Bernard Madoff Ponzi scheme and seek its guidance. If he did consult with the SEC's Office of Ethics Counsel, did he act in accordance with the Office's advice or recommendations.

Full post as published by Jim Hamilton's World of Securities Regulation on February 24, 2011 (boomark / email).