Mary Schapiro, the head of the Securities and Exchange Commission, is taking heat from politicians for her decision to hire a lawyer with ties to disgraced Ponzi-scheme figure Bernard Madoff.
Schapiro’s decision to hire David Becker as general counsel for the SEC raises questions about the ethical standards at the stock watchdog, reports The New York Times. Becker’s role in the Madoff case came to light in a lawsuit filed by the trustee overseeing compensation for Madoff’s victims, Irving Picard.
Picard named Becker and his two brothers in the suit in an effort to recover $1.5 million they received in an inheritance. The money resulted from an investment with Madoff, according to the newspaper.
The newspaper charged that Becker later gave the SEC advice in the Madoff matter that would benefit him and his brothers. Becker did not comment for the story.
Lawmakers are asking Schapiro to explain. “One of the things the SEC does is hold companies to a very high standard with regards to transparency and disclosure,” Rep. Randy Neugebauer, a Texas Republican, told the Times.
In a letter to Congress obtained by The Washington Post, Schapiro defended her decisions.
"When Mr. Becker initially notified me that his deceased mother had had a Madoff account that had been closed years earlier, the issue did not appear to me to present a conflict of interest," Schapiro wrote to the House Financial Services Committee.
"I relied on Mr. Becker to present any ethics-related issues, including appearance issues, to Ethics Counsel and on Ethics Counsel to perform his review and analysis of such situations," she wrote.
Picard recently said that the recovery effort would soon begin to disburse some of the $2.6 billion so far recovered for investors who lose money in the massive, decades-long scheme, for which Madoff went to prison. Picard is seeking $100 billion from investors who profited from the scheme, most of whom claim to have had no knowledge of the fraud.
"It is difficult to predict exactly how much we will ultimately recover," Picard said in a conference call reported by The Wall Street Journal. "We hope it will be a majority of what we are seeking."
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