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Senator Calls Ex-SEC General Counsel’s Madoff Work ‘Troubling’

Senator Charles Grassley said he was troubled that the former top lawyer at the Securities and Exchange Commission was allowed to work on policy related to the Bernard Madoff fraud after inheriting profits from the Ponzi scheme.

The Iowa Republican, who today released a letter he received from the SEC official, David Becker, said the agency should revise its ethics guidelines to prevent such “obvious” conflicts in the future.

Grassley and Representative Darrell Issa, a California Republican, wrote to Becker March 4 asking him to explain his actions at the agency. In his response, Becker reiterated his previous comments on the matter, saying he followed all appropriate ethics rules.

“At the very least, the SEC showed an extreme insensitivity to the Madoff victims,” Grassley said in a statement. “Mr. Becker seemed to hold himself only to the minimal standard of what he believed was technically legal, rather than what was best for the Madoff victims and the integrity of the SEC.”

Becker left his SEC post last month. He and his brothers, who inherited about $2 million from their late parents’ investment with the now imprisoned financier, are being sued by a court-appointed trustee in the Madoff bankruptcy case. The trustee is seeking the return of what he termed $1.5 million in fictitious profits.

Testifying before Congress on March 10, SEC Chairman Mary Schapiro said that in retrospect she wishes Becker had declined to work on Madoff policy.

In his response to Grassley, Becker said he is “confident that any fair review of my actions” will show that his work was in the best interests of investors and the SEC.

“I believe I did precisely what I was supposed to do: I spotted an issue, raised it with the ethics office and followed the advice I was given,” Becker wrote.

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To contact the reporter on this story: Robert Schmidt in Washington at rschmidt5@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net

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