Issa subpoenas Madoff trustee on ex-SEC lawyer

Reuters News
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Posted: Mar 21, 2011 3:43 PM

By Sarah N. Lynch

WASHINGTON (Reuters) - The House Oversight Committee has subpoenaed records from Bernard Madoff Trustee Irving Picard to determine if a former Securities and Exchange Commission lawyer should have advised the agency on Madoff matters because he inherited money from a Madoff fund.

Committee Chairman Darrell Issa said on Wednesday that he had asked Picard for all documents pertaining to the account of David Becker's family and communications between Picard and the SEC concerning how victims should be able to file claims.

Picard is now suing Becker and his brothers to claw back $1.5 million in phony profits from their mother's estate. Becker has not been accused of knowing about the fraud.

Picard must comply with the subpoena by the end of business on March 22.

Amanda Remus, a spokeswoman for Picard, said he had received the subpoena and would "respond in due course." She declined to comment further on the Becker complaint because it is still in litigation.

An SEC ethics counsel cleared Becker to work on Madoff legal matters, including a recommendation on how Madoff's victims should be compensated. Becker worked as the SEC's general counsel from February 2009 until February 25, 2011. He previously worked at the SEC from 1998 to 2002 in various roles.

The SEC voted in 2009 on the recommended method to compensate Madoff's victims, with some commissioners and staff unaware that Becker had received money from Madoff funds, sources have told Reuters.

"Victims of the Madoff swindle rightly feel cheated by the SEC's ineptitude," Issa said. "The decision to allow David Becker to work on the Madoff case, despite family earnings from a Madoff account, necessitates answers."

Issa's announcement about the subpoena comes nearly one week after he held a hearing on the issue.

At that hearing, SEC Chairman Mary Schapiro told lawmakers she now wishes in hindsight that Becker had recused himself. She said she knew that Becker's mother had a Madoff account, but could not recall whether Becker specifically told her that he inherited money from that account.

Schapiro has asked the agency's inspector general to investigate the matter.

(Reporting by Sarah N. Lynch; Editing by Gerald E. McCormick and Tim Dobbyn)