S.E.C. Refers Ex-Counsel’s Actions on Madoff to Justice Dept.

[alp227]

Source: The New York Times

Actions taken by David M. Becker, the former general counsel of the Securities and Exchange Commission, in the Bernard L. Madoff matter are being referred to the Department of Justice for a possible criminal investigation to determine whether they ran afoul of federal conflict-of-interest laws.

Mr. Becker had financial ties through his family to an account with Mr. Madoff that he inherited with his brothers in 2004 and quickly closed. The Beckers have since been sued by the trustee overseeing the Madoff case, who is seeking to recover about $1.5 million in gains they received. Mr. Becker’s work at the S.E.C. in 2009 included advising on the compensation of Madoff victims, including how much they could recover.

The referral was part of an investigation into whether it was appropriate for Mr. Becker to work on Madoff-related matters at the commission given his financial tie. The 119-page report on Mr. Becker’s actions was undertaken by H. David Kotz, the inspector general of the S.E.C. Mr. Kotz wrote that he is referring the matter to federal prosecutors after consulting last month with the Office of Government Ethics and receiving its recommendation to do so.

The report is another black eye for an agency already under scrutiny for missing the Madoff scandal and more recently for routine destruction of some enforcement documents that may have been useful in later investigations.

Read more: http://www.nytimes.com/2011/09/21/business/sec-refers-ex-counsels-actions-on-madoff-to-justice-dept.html?pagewanted=all

[Supersedeas]

1. nothing to see here...the Securities and Exchange Commission is beyond reproach

This matter will be handled internally.

[chill_wind]

2. K & R. Hill testimony on Thursday.

The article describes the report as talking quite a bit about Mary L. Schapiro, the chairwoman of the S.E.C.. She's expected to testify along with Kotz and Becker at a joint Congressional hearing Thursday of the House Financial Services Committee and the Committee on Oversight and Government Reform.

That ought to be pretty interesting.

[No Elephants]

3. The SEC did not merely "miss" the Madoff fraud. A man went to the SEC more than once,

explaining what Madoff was doing and how he was doing it.

(This man was getting flack because his investments were not getting as high returns for investors as Madoff was claiming.)

The SEC supposedly investigated and found nothing wrong.

Come on, that's not "missing" a fraud.

And Bernie has said current head of the SEC, Mary Shapiro, is a dear friend.

Some of her history and some of her ties to the Madoffs here:


http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5364345.ece

She should never have been appointed, IMO.