Legal Ethics

SEC GC Says He Didn’t Recuse on Madoff Matters on Advice of Ethics Counsel

The outgoing general counsel of the Securities and Exchange Commission says he relied on legal advice when he didn’t recuse himself in Bernard Madoff matters, despite his mother’s profitable investment with the now-convicted Ponzi schemer.

David Becker, who served two stints as the general counsel of the SEC, explained why he worked on some Madoff-related issues in a letter to House Republicans who questioned his work, according to stories by Bloomberg and Reuters.

Becker is facing a clawback suit by the Madoff bankruptcy trustee that claims Becker’s late mother earned more than $1.5 million in fictitious profits from Madoff. Becker and his brothers were executors of their mother’s estate, and they liquidated their late mother’s Madoff account in 2005, according to the suit. The complaint does not allege they were aware of the Madoff fraud at the time.

Becker told House Republicans that he informed SEC chairman Mary Schapiro and SEC ethics counsel William Lenox about his mother’s Madoff account when he returned to the agency in 2009, a time when the SEC was focused on enforcement actions against Madoff. Becker writes that he consulted with Lenox at least twice, and both times Lenox concluded Becker’s legal work wouldn’t have a direct effect on his financial interests, the stories say.

Becker also said he wasn’t aware of tips about a possible Madoff Ponzi scheme during his first stint at the SEC.

We welcome your comments, but please adhere to our comment policy and the ABA Code of Conduct.

Commenting is not available in this channel entry.