* Becker had inherited Madoff money, advised SEC on Madoff
* SEC chairman wishes she'd told other commissioners
* SEC watchdog has found Becker had conflict of interest
* Becker says he did nothing wrong, disclosed inheritance
* Becker calls watchdog's criminal referrals "laughable"
(Rewrites with lawmaker comments on criminal liability)
By Sarah N. Lynch
WASHINGTON, Sept 22 Some Democratic lawmakers
expressed skepticism on Thursday that a former top U.S.
Securities and Exchange Commission lawyer may have violated
criminal law for failing to recuse himself from handling
Bernard Madoff legal matters for the agency.
Former SEC General Counsel David Becker and his brothers
inherited $2 million in Madoff funds from their mother's
estate. Becker informed the SEC of the fact and received
clearance from the agency's ethics counsel.
SEC Inspector General David Kotz issued a report this week
saying Becker should have nevertheless recused himself and
referred the matter to the Justice Department for possible
"There was no indication... of any criminal wrongdoing," in
the report said Representative Michael Capuano at a lengthy
hearing held Thursday to dissect Kotz's findings. "Maybe it was
kicked up simply to pass the buck along. We'll see."
Still, some lawmakers questioned why Becker failed to make
his own decision not to participate in Madoff matters.
Becker, now a partner with law firm Cleary Gottlieb, was
sued shortly before departing the SEC in February by Madoff
trustee Irving Picard. The trustee filed a clawback lawsuit
against Becker and his two brothers for $1.5 million in alleged
phony profits their mother's estate received.
Becker told lawmakers he did nothing wrong and simply
followed the advice he was given by the agency's former ethics
counsel, who advised him on two occasions he had no conflict.
"If you could rewind the tape, would you recuse yourself?"
asked Patrick McHenry, the chairman of a House Oversight
"I would have recused myself if I knew I was going to be
sued," replied Becker, who added that the criminal referral did
not really "move the needle."
"I have seen Inspector General Kotz do this before, make a
big fuss... about sending reports to the Justice Department,"
Becker said. "Nothing has happened in any of them, and some of
them that I recall from my time at the SEC were laughable."
Elijah Cummings, the ranking Democrat on the Oversight
Committee, asked Kotz whether he had found any evidence that
Becker made false statements to anyone at the SEC about his
family's financial tie to Madoff, an issue on which a criminal
case could turn.
"Mr. Becker did not provide any false statements per se,"
The Ponzi scheme being run at Bernard L. Madoff Investment
Securities LLC was uncovered on Dec. 11, 2008, and Madoff, 73,
is now serving a 150-year prison sentence.
Prior to the trustee's lawsuit, Becker participated in
several important legal matters related to Madoff, including
recommending a method to calculate compensation for investors
in Madoff's scheme.
Kotz's report argued that Becker stood to gain financially
from his participation, especially because he advocated for a
calculation method that benefited longer-term investors by
adjusting accounts for inflation.
SEC Chairman Mary Schapiro told the hearing that she has
apologized to fellow commissioners for failing to disclose what
she knew of Becker's conflict of interest ahead of a vote on a
recommended recovery formula for Madoff victims.
"It did not frankly occur to me to direct him to tell the
commissioners," SEC Chairman Mary Schapiro said. "I wish I had
(Reporting by Sarah N. Lynch; editing by Carol Bishopric and