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SEC Lawyer’s Role in Madoff Case Questioned by Lawmakers

U.S. House Republicans asked Securities and Exchange Commission Chairman Mary Schapiro to disclose details of the participation of the agency’s chief lawyer in the investigation of Bernard Madoff’s Ponzi scheme.

The SEC said today that the agency’s departing general counsel, David M. Becker, didn’t recuse himself from the Madoff probe after he and his brothers inherited about $2 million in 2004 from their mother’s investment with the jailed financier.

Becker sought an opinion from the SEC’s ethics office “shortly after his return to the agency in 2009” about the family Madoff account, John Nester, an SEC spokesman, said in a statement. The ethics office told Becker he didn’t need to disqualify himself from “participation in certain Madoff-related matters,” Nester said.

Becker said yesterday that he learned through a summons last week that he and his two brothers were sued in bankruptcy court in New York by Irving H. Picard, the trustee liquidating Madoff’s firm, who seeks to recover $1.5 million of the inheritance as a “fictitious” gain.

House Financial Services Chairman Spencer Bachus and three senior members of his panel sent Schapiro a letter today requesting information on any meetings between Becker and Madoff, as well as whether he prepared “any legal memoranda, or provided counsel to any SEC employees about any matters” involving Madoff’s firm.

No Meetings

“Mr. Becker is not aware of ever having met with Madoff,” Nester said, declining to comment on any other specifics in the Republicans’ letter.

The lawmakers also asked for information and documentation about Becker’s involvement in the Madoff case, including “all meetings with the Department of Justice, the Securities Investor Protection Corporation, Mr. Irving Picard or any Madoff victims.”

Becker and his brothers inherited the money upon their mother’s death in 2004. Becker, who previously announced he would be leaving the SEC at the end of this week, said yesterday he had no detailed knowledge of his parents’ investment with Madoff and didn’t learn of the lawsuit before receiving the summons last week.

His departure from the SEC isn’t connected to Picard’s lawsuit, Becker said yesterday. He declined to discuss his conversations with SEC officials about the matter.

Becker, who had been the SEC’s general counsel from 1999 to 2002, returned to that role in 2009. At the time, the agency was reeling from its failure to uncover the Madoff scandal before it unraveled in 2008.

The congressional letter was co-signed by Representatives Randy Neugebauer of Texas and Scott Garrett of New Jersey, two subcommittee chairmen on the panel, as well as panel Vice-Chairman Jeb Hensarling of Texas. The lawmakers requested a response by March 4.

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