The U.S. Securities and Exchange Commission’s internal watchdog asked for the Justice Department to consider whether the agency’s former general counsel violated criminal conflict of interest law through his work on policy relating to the Bernard Madoff fraud.
In a 119-page report sent to Capitol Hill today, SEC inspector general H. David Kotz said he was referring the allegations to prosecutors after receiving guidance from the U.S. Office of Government Ethics. Former general counsel David Becker, who inherited profits from the Madoff fraud, “participated personally and substantially in particular matters in which he had a personal financial interest,” Kotz wrote.
Kotz opened his probe after Becker and his brothers were sued by the court-appointed trustee in the Madoff bankruptcy case to recover $1.5 million in what he termed fictitious profits. When he joined the agency in 2009, Becker told Chairman Mary Schapiro and William Lenox, then the agency’s ethics counsel, about his family’s Madoff investment. Lenox told Becker in May 2009 that he didn’t have a financial conflict of interest and could work on the matter.
A phone call to William Baker III, Becker’s attorney at Latham & Watkins LLP, wasn’t immediately returned.