Top SEC lawyer did not recuse himself on Madoff (Reuters)

By Sarah N. Lynch Sarah N. Lynch – Mon Feb 28, 6:29 pm ET

WASHINGTON (Reuters) – The top attorney for the U.S. securities regulator was advised not to recuse himself from handling Bernard Madoff matters for the agency, even though his family's estate had invested with the swindler.

Outgoing Securities and Exchange Commission General Counsel David Becker discussed his rationale for continuing to work on Madoff matters in a letter to several House of Representatives Republicans who inquired about the issue last week.

Becker, whose last day at the SEC was on Friday, is the subject of a lawsuit by Madoff Trustee Irving Picard. Picard filed suit against Becker and his brothers in December seeking to recover $1.5 million in phony profits the Becker family estate received from Madoff investments. Becker is a co-executor of his mother's estate. His mother passed away in 2004.

The suit does not claim Becker or his brothers knew anything about the fraud and merely seeks to recover money to harmed investors. Madoff was arrested in December 2008 after admitting he ran a decades-long, multibillion-dollar swindle, considered the biggest investment fraud in history.

Key House Financial Services Republicans last week raised ethical questions about Becker's family's investments and his role as general counsel at the SEC. Becker worked at the SEC between 1998 and 2002, serving as general counsel for part of that time. He later returned to work as general counsel under SEC Chairman Mary Schapiro in February 2009.

In a letter to Republicans, Becker said he disclosed his mother's investments to the SEC ethics attorney William Lenox in 2009 right around the time of his return.

"At the time, the SEC was focused on bringing enforcement actions against Mr. Madoff and others, and in the view of the ethics counsel, those matters did not have a direct and predictable effect on my financial interests," Becker wrote in a letter dated February 25, and disclosed on Monday.

Congressman Randy Neugebauer, the chairman of the House Financial Services Subcommittee on Oversight and Investigations, told Reuters on Monday his staff is still reviewing Becker's responses to ensure that everything was properly disclosed.

"I think there are some unanswered questions there," he said.

In the letter, Becker said he sought counsel from the SEC's ethics lawyer on a second occasion in May 2009 after law firms wrote to the SEC asking the agency to get Picard to change his interpretation for how people could file claims to get their money back.

He said he recognized this issue could affect his financial interests because it could "affect the trustee's decision to bring clawback actions against persons like me."

The ethics counsel decided he could advise the SEC on how to respond to the letters from the law firms questioning Picard's interpretation of the term "securities positions" because it would "not have a direct and predictable effect on the trustee's decision to bring clawback actions."

Becker also said that, when he previously served as general counsel from 2000 to 2002, he did not interact with Madoff and was unaware of the tips the agency received about the Ponzi scheme from Harry Markopolos.

Becker added that "no one specifically considered the issue of whether to notify the public" about his mother's Madoff account when he rejoined the SEC in 2009.

Becker sent his responses to the top Republicans on the House Financial Services Committee, including Chairman Spencer Bachus and Vice Chairman Jeb Hensarling, as well as House Financial Services oversight subcommittee Chairman Randy Neugebauer and House Financial Services capital markets subcommittee Chairman Scott Garrett.

(Reporting by Sarah N. Lynch; editing by Gerald E. McCormick and Andre Grenon)

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Republicans question top SEC attorney on Madoff ties (Reuters)

By Sarah N. Lynch Sarah N. Lynch – Fri Feb 25, 10:10 am ET

WASHINGTON (Reuters) – Several key House Republicans are raising questions of ethics about the top attorney at the Securities and Exchange Commission amid allegations that his family's estate received $1.5 million in phony profits from Bernard Madoff's Ponzi scheme.

In a letter to SEC Chairman Mary Schapiro, they ask questions about what SEC General Counsel David Becker knew about his parents' investments with Madoff and whether he recused himself from advising and representing the commission on Madoff matters.

The letter, which was dated February 24 and disclosed publicly on Friday, comes in response to a lawsuit filed against Becker and his brothers by Madoff trustee Irving Picard. The December lawsuit says that Becker's mother's estate received a little over $2 million from Madoff investments, $1.5 million of which constitutes phony profits. Becker and his brothers are the co-executors of their mother's estate. His mother passed away in 2004.

Madoff was arrested in December 2008 after admitting he ran a decades-long, multibillion-dollar swindle, considered the biggest investment fraud in history.

The suit does not allege that Becker or his brothers knew of the fraud. But it seeks to recover the $1.5 million so it can be returned to other harmed investors.

The SEC has said Becker was not involved in his family's finances and that he did not recall any investments made with Bernard L. Madoff Investment Securities LLC.

Becker is slated to leave his job with the SEC at the end of this month. He most recently served as general counsel since early 2009, but previously he also worked as general counsel under past SEC Chairmen Arthur Levitt and Harvey Pitt.

In the letter, the Republicans ask about whether Becker was aware in 2002 of the tips the SEC had received about Madoff from Harry Markopolos.

They also ask about his past interactions with Madoff, if any, and whether he provided counsel to the SEC on Madoff matters.

Upon Becker's return to the agency in 2009, they also ask if he informed anyone there about his parents' investments and recused himself on Madoff matters.

The letter was signed by top Republicans on the House Financial Services Committee, which oversees the SEC. The signatories include House Financial Services Chairman Spencer Bachus and Vice Chairman Jeb Hensarling as well as House Financial Services oversight subcommittee chairman Randy Neugebauer and House Financial Services capital markets subcommittee chairman Scott Garrett.

(Reporting by Sarah N. Lynch, editing by Dave Zimmerman)

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Republicans question top SEC attorney on Madoff ties (Reuters)

By Sarah N. Lynch Sarah N. Lynch – Fri Feb 25, 10:10 am ET

WASHINGTON (Reuters) – Several key House Republicans are raising questions of ethics about the top attorney at the Securities and Exchange Commission amid allegations that his family's estate received $1.5 million in phony profits from Bernard Madoff's Ponzi scheme.

In a letter to SEC Chairman Mary Schapiro, they ask questions about what SEC General Counsel David Becker knew about his parents' investments with Madoff and whether he recused himself from advising and representing the commission on Madoff matters.

The letter, which was dated February 24 and disclosed publicly on Friday, comes in response to a lawsuit filed against Becker and his brothers by Madoff trustee Irving Picard. The December lawsuit says that Becker's mother's estate received a little over $2 million from Madoff investments, $1.5 million of which constitutes phony profits. Becker and his brothers are the co-executors of their mother's estate. His mother passed away in 2004.

Madoff was arrested in December 2008 after admitting he ran a decades-long, multibillion-dollar swindle, considered the biggest investment fraud in history.

The suit does not allege that Becker or his brothers knew of the fraud. But it seeks to recover the $1.5 million so it can be returned to other harmed investors.

The SEC has said Becker was not involved in his family's finances and that he did not recall any investments made with Bernard L. Madoff Investment Securities LLC.

Becker is slated to leave his job with the SEC at the end of this month. He most recently served as general counsel since early 2009, but previously he also worked as general counsel under past SEC Chairmen Arthur Levitt and Harvey Pitt.

In the letter, the Republicans ask about whether Becker was aware in 2002 of the tips the SEC had received about Madoff from Harry Markopolos.

They also ask about his past interactions with Madoff, if any, and whether he provided counsel to the SEC on Madoff matters.

Upon Becker's return to the agency in 2009, they also ask if he informed anyone there about his parents' investments and recused himself on Madoff matters.

The letter was signed by top Republicans on the House Financial Services Committee, which oversees the SEC. The signatories include House Financial Services Chairman Spencer Bachus and Vice Chairman Jeb Hensarling as well as House Financial Services oversight subcommittee chairman Randy Neugebauer and House Financial Services capital markets subcommittee chairman Scott Garrett.

(Reporting by Sarah N. Lynch, editing by Dave Zimmerman)

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Top SEC lawyer named in Madoff suit (AP)

NEW YORK – The top lawyer at the Securities and Exchange Commission has been named as a defendant in a lawsuit by the trustee who's trying to recover money for victims of Bernard Madoff's Ponzi scheme.
The lawsuit was filed by Irving Picard against David Becker, and claims Becker's family earned more than $1.5 million in phony profits from Madoff's investments.
Becker and his brothers were named executors of their mother's estate, which included a Madoff account. It says they liquidated the account in 2005, withdrawing $2 million.
Becker tells the New York Post he had "absolutely" no idea Madoff was running a fraud. He says the suit is about his parents' investments, which he had nothing to do with.
Becker is the SEC's general counsel, but returns to the private sector next week.
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Information from: Daily News, http://us.rd.yahoo.com/dailynews/ap/ap_on_bi_ge/storytext/us_sec_lawyer_madoff/40343497/SIG=10sd6qia1/*http://www.nydailynews.com
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Madoff says banks had to know of Ponzi scheme: report (Reuters)

NEW YORK (Reuters) – A frail Bernard Madoff, facing the rest of his life in prison, said a variety of banks and hedge funds were complicit in and "had to know" about his epic Ponzi scheme before it was uncovered, The New York Times reported.

In his first interview for publication since his December 2008 arrest, Madoff said banks and hedge funds who dealt with his investment advisory firm demonstrated a "willful blindness" toward his activities, and failed to examine discrepancies between his regulatory filings and other information.

"They had to know," Madoff, described as noticeably thinner and dressed in khaki prison clothing, said in a visiting room in the federal prison in Butner, North Carolina. "But the attitude was sort of, 'If you're doing something wrong, we don't want to know.'"

Madoff, 72, is serving a 150-year prison sentence for what prosecutors called his $65 billion Ponzi scheme, which was uncovered in December 2008.

Irving Picard, a court-appointed trustee seeking money for Madoff victims, has filed lawsuits seeking tens of billions of dollars from companies and individuals he believes benefited from or aided in Madoff's Ponzi scheme.

NO EXCUSES

Among the defendants in these cases is JPMorgan Chase & Co, long Madoff's principal banker and described by Picard as "thoroughly complicit" in the Ponzi scheme.

Other defendants include HSBC Holdings Plc, UBS AG, various "feeder funds" that steered money to Madoff, and the owners of the New York Mets baseball team.

A spokesman for Picard did not immediately return a request for comment. Picard declined to comment to the newspaper. He has recovered about $10 billion for victims so far.

Stephen Cutler, JPMorgan's general counsel, at a presentation on Tuesday said Picard "overreached" in his $6.4 billion lawsuit against the bank, and that JPMorgan "did not know about or in any way participate in the fraud."

In the Times interview, conducted in conjunction with a forthcoming book, Madoff acknowledged his guilt and said nothing could excuse his crimes.

He did not assert that any specific bank or hedge fund knew about or was an accomplice in his Ponzi scheme, which Picard said cost investors more than $20 billion.

METS EXECUTIVES DIDN'T KNOW, MADOFF SAYS

But in a December 19 email cited in the Times article, Madoff said he had been providing Picard with "information I knew would be instrumental in recovering assets from those people complicit in the mess I put myself into."

Then, 10 days later, he said "the banks and funds were complicit in one form or another and my information to Picard when he was here established this."

As to Mets principals Fred Wilpon and his brother-in-law Saul Katz, Madoff said: "They knew nothing. They knew nothing."

In the December 19 email, Madoff also said he had not shared his information with federal prosecutors working on criminal cases related to the fraud.

Eight people have been criminally charged. Madoff, his right hand man Frank DiPascali, and an outside accountant have pleaded guilty. Five, all of whom used to work for Madoff, have pleaded not guilty.

Madoff also told the Times he never thought the collapse of his Ponzi scheme would cause the kind of fallout that has befallen his family.

Picard has filed lawsuits against Madoff's wife, Ruth, that could bankrupt her, while Madoff's son Mark committed suicide on December 11, 2010, two years after the Ponzi scheme was revealed.

Madoff said prison officials would not let him attend his son's funeral, saying it could pose a "public safety issue." He later said it would be "cruel" to put his family through what could be a "media circus" were he to attend.

(Reporting by Jonathan Stempel in New York; Additional reporting by Clare Baldwin; Editing by Gary Hill)

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