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David Becker, the former general counsel of the Securities and Exchange Commission, “participated personally and substantially in particular matters in which he had a personal financial interest,” according to an investigator’s report released Tuesday. The report, available on the SEC’s website [PDF], has been referred to the U.S. Department of Justice’s public integrity section to consider whether Becker committed at least two criminal conflicts of interest under chapter 18 of the U.S. Code. On March 4, the SEC’s Office of the Inspector General began investigating Becker’s role in matters relating to the Bernie Madoff Ponzi scheme and bankruptcy, at the request of SEC chairman Mary Schapiro. Her request came after she received inquiries from members of Congress and after the Madoff bankruptcy trustee had filed a suit against Becker seeking to claw back some $1.5 million in profits. Becker and two siblings had inherited the Madoff money from their mother’s estate. By virtue of the inheritance, “the matters on which [Becker] advised could have directly impacted his financial position,” the IG report says. It continues: “We found that Becker played a significant and leading role in the determination of what recommendation the staff would make to the commission regarding the position the SEC would advocate as to” how customers’ claims would be paid. The probe also found that Becker “worked on particular matters that could impact the likelihood, and even possibility, of a clawback suit against him, as well as the amount that could be recovered in such a clawback action.” Becker had twice sought the advice of the SEC ethics counsel, William Lenox, who cleared him to work on the Madoff matters despite telling other attorneys in the office to recuse themselves. The IG’s report recommended that the ethics office, which now reports to the SEC’s general counsel, instead report to the commission chairman. It also expressed dismay at the lack of documentation and recommended that the ethics office begin documenting its ethics advice “in significant matters,” such as financial conflicts of interest. The report also suggested that the SEC hold a new vote on the issue of how to pay claims, absent the possible bias brought by Becker. In a statement today, Schapiro said she would comply with the recommendations, including the vote on the claims issue. “I take his report, which was published today, very seriously,” Schapiro said. “It would be inappropriate for me to comment on the Inspector General’s referral to the Department of Justice. . . I do want to state that I’ve known David for many years to be a talented, highly skilled lawyer, and a dedicated civil servant who served under three chairmen.” Two House subcommittees have scheduled a joint hearing on the report on Thursday. Schapiro, inspector general David Kotz, and Becker are scheduled to testify. Becker—who also worked as a deputy general counsel at the SEC between 1998 and 2002—resigned his GC post in February and has since returned to his partnership at Cleary Gottlieb Steen & Hamilton in Washington D.C. He didn’t return messages for comment. See also: “Former SEC General Counsel Expected to Face DOJ Investigation,” CorpCounsel, September 2011.

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