According to the NY Times’ Gretchen Morgenson and Louise Story Federal ethics officials are expected to recommend that the Justice Department begin a criminal investigation into actions taken by David M. Becker, the former general counsel of the Securities and Exchange Commission, who determined the agency’s proposal for compensating victims of the Bernard Madoff Ponzi scheme when he had a financial interest in the outcome.
A possible criminal referral from the Office of Government Ethics is expected to be part of a report issued next week by H. David Kotz, the inspector general of the SEC, according to two people briefed on the report’s contents.
Mr. Kotz began investigating Mr. Becker’s role in reversing an earlier agency compensation plan for Madoff victims after the Becker family’s $2 million Madoff stake was disclosed publicly last February.
Federal conflict of interest law 18 USC § 208 requires government employees to be disqualified from participating in a matter “if it would have a direct and predictable effect on the employee’s own financial interests.”
Mr. Becker joined the SEC in February 2009 at the urging of its chairwoman, Mary L. Schapiro. In that role, he persuaded the SEC to change its victim compensation methodology to a more generous approach, even though he had received a Madoff stake through an inheritance from his late mother, who had invested with the money manager. Mr. Becker left the commision this year.
William R. Baker III, a lawyer for Mr. Becker, declined to comment for this article. A spokesman for the SEC declined to comment because the commission had not seen the report.
Find out more at http://www.nytimes.com/2011/09/17/business/sec-official-in-madoff-case-may-draw-a-criminal-inquiry.html
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