Issa, Grassley probing SEC on ex-lawyer’s Madoff ties

“Becker’s participation in any aspect of the Commission’s involvement with the aftermath of Madoff’s fraud suggests multiple potential conflicts of interest,” they wrote. “It has also subjected the Commission to further questions about its management and independence.”

Becker’s connection to Madoff was revealed when the trustee charged with recovering funds paid out by Madoff sued Becker in bankruptcy court. The suit revealed that Becker’s family inherited roughly $1.5 million that was once invested in a Madoff account, after his mother died in 2004. Becker left the SEC Friday for unrelated reasons.

Issa and Grassley contend that Schapiro failed to fully examine potential conflicts of interest, and that Becker failed to fully inform the SEC ethics office of his financial involvement with Madoff when asking for a waiver to work on certain SEC matters.

In fact, the lawmakers claim SEC ethics counsel William Lenox granted Becker his waiver request 25 minutes after he asked for it — making it impossible for Lenox to independently verify Becker’s claim that his ties were not significant.

Furthermore, they claim Becker met with Madoff victims — whose interests were directly opposed to his, as any clawback litigation could result in forfeiture of Becker’s funds for those victims — without disclosing his stake.

According to the letter, Becker met with congressional staffers on Feb. 25 to discuss the matter, where he said the Madoff account had been liquidated and its proceeds used to pay estate taxes. Any remaining funds were shared between Becker and his two brothers, he added.

The letter includes several questions that delve deep into how Becker raised the issue with Schapiro, the decision by the SEC’s ethics counsel that Becker need not recuse himself, and any subsequent work involving Becker that may be tied to Madoff.

An SEC spokesman declined to comment on the probe, pending the agency’s response to the lawmakers’ letter.