Two high-ranking Republicans have questioned the decision by the Securities and Exchange Commission to allow the SEC’s former general counsel, David Becker, to participate in handling the case of Bernard Madoff, the admitted orchestrator of a multibillion-dollar Ponzi scheme.
Sen. Charles Grassley of Iowa, the ranking minority member on the Senate Judiciary Committee, and Rep. Darrell Issa of California, the chairman of the House Oversight and Government Reform Committee, wrote SEC Chairwoman Mary Schapiro complaining that the agency had failed to detect Becker’s conflicts of interest, according to the Corporate Counsel blog.
In a long letter, the lawmakers’ expressed dismay that Becker, who is a defendant in a “clawback” suit filed by Madoff trustee Irving Picard over allegedly fictitious profits from the liquidation of his mother’s estate, may have participated in Madoff-related issues after beginning his second stint at the SEC in 2009 — after the Madoff fraud had been exposed. Becker left the SEC on Feb. 25.
Grassley and Issa said it appeared that Becker may not have fully disclosed his interest in Madoff matters when getting clearance from the SEC’s ethics section to participate in them. The lawmakers said they hope to get answers to their questions by Monday.
The lawsuit against Becker and his two brothers, claiming that Becker’s family earned more than $1.5 million in phony profits from Madoff’s investments, was filed recently, as Main Justice reported.
The Madoff affair has been an acute embarrassment for the SEC. The agency’s internal watchdog office, in a scathing report in September 2009, found that Madoff had bamboozled SEC investigators, too many of whom were out of their depth dealing with a suave, well connected legend in the world of big investing. Most investigators found it unthinkable that Madoff’s financial empire was built on one gigantic lie — which it was.
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What has the SEC done since to prevent this sort of thing from happening again? If someone can create a ponzi scheme so elaborate that it can operate right under the noses of the SEC, how can we be sure they know what’s going on in the financial world. Take the latest case of major international fraud – Maan Al Sanea’s multi-billion dollar fraud against a respectable business family. The case actually led to larger out-of-pocket expenses than the Madoff case and involved laundering billions of dollars through major British and U.S. banks. (http://www.globalfraudnews.com/) Thankfully, the case has finally resulted in criminal charges. Still, when will the SEC step up its game?
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