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The Securities and Exchange Commission is expected to ask the U.S. Department of Justice this week to examine whether former SEC general counsel David Becker violated any criminal conflict-of-interest laws related to his profits from the Bernie Madoff Ponzi scheme. The timing is especially sensitive for the SEC, which is seeking to ban certain conflicts of interest in those it regulates. The commission voted unanimously on Monday to propose a rule prohibiting material conflicts between those who package and sell asset-backed securities and those who invest in them. The rule is intended to implement a section of the Dodd-Frank Wall Street Reform and Consumer Protection Act. But it wouldn’t stop what happened with Becker at the SEC. You’ll recall that Becker advised the SEC on Madoff matters after he and two siblings inherited $1.5 million in profits from his mother’s investment. The SEC’s ex-ethics officer cleared him in May 2009 to take part in the Madoff policy decisions. But the court-appointed trustee in the Madoff bankruptcy case questioned Becker’s role and sued Becker and his family last December to claw back the profits. So far, Becker and his family members haven’t filed a legal response to the suit. Becker resigned his SEC post last February after members of Congress called for an investigation. SEC Iinspector general David Kotz has reviewed Becker’s role. The IG’s report—which was delivered on Friday but has not been released—is expected to recommend further investigation by the DOJ. Becker—who also worked as a deputy general counsel at the SEC between 1998 and 2002—has since returned to his partnership at Cleary Gottlieb Steen & Hamilton in Washington, D.C. He didn’t return messages for comment. See also, “SEC Officials are ‘Lawyering Up’ Amidst Internal Investigations,” CorpCounsel, September 2011.

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