Legal Ethics

Former SEC General Counsel Defends His Madoff Work amid Conflict Questions

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A former Securities and Exchange Commission lawyer defended his role in the Bernard Madoff case at a congressional hearing Thursday.

Former SEC general counsel David Becker is under fire for failing to recuse himself in policy matters involving compensation formulas for victims of accused Ponzi schemer Bernard Madoff, report the New York Times, the Washington Post and Corporate Counsel. Becker’s late mother had profited from Madoff investments.

“I didn’t think I had a conflict,” Becker said in a hearing by two congressional panels. “I did precisely what I was supposed to do,” he said, which was to disclose the facts to the SEC chairman and to an SEC ethics officer. The ethics office found no conflict of interest.

Becker said he took a pay cut of more than 90 percent to return to government service, costing him millions of dollars. His compensation advice, accepted by the SEC, was that Madoff victims should be entitled to the amount of money they deposited with him, along with an inflation adjustment, the Washington Post says.

SEC Inspector General H. David Kotz investigated Becker and referred his findings to the U.S. Justice Department. Becker criticized Kotz’s action, according to the Post account.

“I have seen Inspector General Kotz do this before—make a big fuss, lots of publicity about sending reports to the Justice Department,” Becker said. “Nothing has happened with any of them, and some of them, I recall from my time at the SEC, were laughable.”

Asked if the current situation was laughable, Becker replied: “No, they say comedy is what happens to someone else and tragedy is what happens to you, so this is a tragedy.”

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