A number of BrokeAndBroker readers have asked me to post the Issa / Grassley Press Release about the Congressional inquiry into the Securities and Exchange Commission's internal decision to allow its former General Counsel David Becker to advise and represent the SEC in the Madoff case, and whether said decision was undertaken without fully and properly examining questions about conflicts of interest.
Reprinted below, you will find
WASHINGTON D.C. - Oversight and Government Reform Committee Chairman Darrell Issa and Committee on the Judiciary Ranking Member Senator Chuck Grassley sent a letter today requesting additional information from the Securities and Exchange Commission (SEC). Chairman Issa and Senator Grassley seek to clarify how the SEC neglected to act on the seemingly obvious, significant conflicts of interest presented by then-General Counsel David Becker's involvement in the Madoff case.
"Becker's participation in any aspect of the Commission's involvement with the aftermath of Madoff's fraud suggests multiple conflicts of interest. It has also subjected the Commission to further questions about its management and independence," wrote Rep. Issa and Senator Grassley in their letter to SEC Chairman Mary Schapiro.
Based on a staff review of SEC documents and an interview of Becker:
•Chairman Schapiro allowed Becker to advise and represent the SEC in the Madoff case without fully properly examining the conflicts of interest presented by Becker's personal financial interest.
•Chairman Schapiro knew, from February 2009, that Becker had received money from a Madoff account. They did not discuss Becker's possible clawback liability in the Madoff bankruptcy case.
•Becker advised and represented the SEC in the Madoff bankruptcy case - the same case in which he eventually became a clawback defendant, recommending a position that affected his personal financial interest.
•Chairman Schapiro knew that Becker, her general counsel, was responsible for this work, but failed to determine whether the advice he was providing might affect his personal financial interest.
•Becker asked for a waiver from the SEC's ethics office to perform this work, but did not fully disclose his financial interest. to the ethics office.
•SEC ethics counsel William Lenox granted Becker's waiver request 25 minutes after Becker made it, accepting Becker's incorrect assertion that the work would not affect his financial interest.
•SEC ethics counsel William Lenox granted Becker's waiver request 25 minutes after Becker made it, accepting Becker's assertion that "any claim" would be "too small and of dubious merit" to bring against him, without independent verification.
•Becker met with Madoff victims whose interests were opposed to his, because they will receive portions of any Madoff money that he forfeits in the clawback litigation - and did not disclose this fact to them.
•Becker's financial interest and conflicts were not disclosed to the Commission's Inspector General, or the public, until Becker was sued in the Madoff bankruptcy case.
The trustee in charge of seized Madoff assets, Irving Picard, is currently suing Becker to claw back $1,544,454 earned from Becker's mother's Madoff account.
Read the waiver.
Read the letter.
Read Bill Singer's prescient commentary about David Becker -- before the Madoff conflict issue blew up!
New SEC Scandal: Can We Solve This Mess? (By Bill Singer, February 10, 2011)