Legal Ethics

DOJ to Mull Possible Criminal Probe of Former SEC General Counsel's Role in Madoff Liquidation


Already facing a clawback suit, along with siblings, concerning an investment account with convicted Ponzi schemer Bernard Madoff that was part of his mother’s estate, a former general counsel of the Securities and Exchange Commission is now potentially the subject of a federal criminal probe.

In a report (PDF) dated Sept. 16, inspector general H. David Kotz says he is referring his findings in an investigation of David M. Becker concerning conflicts of interest to federal prosecutors at the Department of Justice, reports the New York Times (reg. req.).

“Overall, the OIG investigation found that Becker participated personally and substantially in particular matters in which he had a personal financial interest by virtue of his inheritance of the proceeds of his mother’s estate’s Madoff account and that the matters on which he advised could have directly impacted his financial position,” states an executive summary of the report.

“We found that Becker played a significant and leading role in the determination of what recommendation the staff would make to the Commission regarding the position the SEC would advocate as to the determination of a customer’s net equity in the Madoff liquidation.”

William R. Baker III of Latham & Watkins represents Becker. He declined to comment before reading the report, the Times article says.

Mary L. Schapiro, who chairs the SEC, also declined to comment specifically about the report, but said generally of Becker: “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 is now a partner at Cleary Gottlieb Steen & Hamilton, a subsequent Am Law Daily post notes.

Related coverage:

ABAJournal.com: “Why Madoff Warnings Were Ignored: Regulators Had Wrong Incentives”

ABAJournal.com: “SEC General Counsel Is Named in Clawback Suit by Madoff Trustee”

ABAJournal.com: “SEC GC Says He Didn’t Recuse on Madoff Matters on Advice of Ethics Counsel” Update at 7:25 p.m .to include information from subsequent Am Law Daily post.

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