Madoff matter: SEC chief faces Congress' ire

By Jennifer Liberto, senior writer


WASHINGTON (CNNMoney.com) -- The Securities and Exchange Commission chief on Thursday faced angry lawmakers who grilled her about why she let her top attorney work on the Bernard Madoff Ponzi scheme case -- knowing his late mother was a Madoff investor.

Mary Schapiro said she now wishes David Becker, who was her general counsel from February 2009 through last month, had dropped his involvement of the Madoff case.

Had she known then, what she knows now, Schapiro said: "I wish that Mr. Becker had recused himself. Absolutely."

In February 2009, Becker told Schapiro that a deceased relative had a closed account as an investor in Bernard Madoff.

Schapiro said that, at the time, it didn't raise red flags. But she expected Becker to check with the SEC's ethics officer -- who ruled that Becker could work on the case. That ethics officer reported directly to Becker, SEC officials confirmed during the hearing.

"I didn't think the account of a long-deceased relative would cloud his work," Schapiro said.

Becker then went on to oversee the SEC's legal work on the Madoff case, which included evaluating the amount victims who were account holders on the day of the fraud could claim as losses.

Last month, the Madoff trustee, Irving Picard of Baker & Hostetler, announced a $1.5 million clawback lawsuit against Becker and his two brothers -- heirs to the estate of their mother, Dorothy Becker.

Dorothy Becker had invested roughly $500,000 with Madoff. After she died, the Becker brothers had withdrawn $2 million on behalf of the estate in 2004. Picard wants the family to return everything but their original investment.

Schapiro said she now appreciates "the potential of this issue to raise the appearance of a conflict."

She pledged to work to "heighten sensitivity to issues like this" throughout the agency, recognizing that such conflicts cause the public to distrust her agency, which is tasked with watching Wall Street.

"I've worked so hard in the last two years to put this agency back on the right path," she said. "It infuriates me, because most people are working their hearts out every single day."

But still, she faced more questions.

"Mr. Becker's work, in retrospect, was not a good idea," said Rep. Darrell Issa, a California Republican who runs the House Oversight Committee. "How can we know that the changes you're asking to be reviewed are going to clearly eliminate any conflicts like this in the future?"

"Well, Congressman, that's a fair question," Schapiro said. She explained that they have hired a new ethics council and would work to stamp out similar conflicts of interest. To top of page

madoff, schapiro, sec, becker
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,804.80 26.65 0.15%
Nasdaq 4,765.38 16.98 0.36%
S&P 500 2,070.65 9.42 0.46%
Treasuries 2.18 -0.03 -1.27%
Data as of 2:27am ET
Company Price Change % Change
Bank of America Corp... 17.62 0.09 0.51%
Apple Inc 111.78 -0.87 -0.77%
General Electric Co 25.62 0.48 1.91%
Intel Corp 36.37 -0.65 -1.76%
Microsoft Corp 47.66 0.14 0.29%
Data as of Dec 19

Sections

New York Magazine reporter Jessica Pressler, who has been caught up in controversy this past week, will not be moving on to a new job at Bloomberg News. More

Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More

Forums in dark corners of the web sell the kinds of hacks that befell Sony. More

Unilever sued Hampton Creek over its egg-free mayonnaise spread Just Mayo. But the company behind Best Foods and Hellman's mayonnaise has now dropped the lawsuit. More

The income of the top 1% jumped significantly in 2012, far outpacing inflation. Not only did this group make a larger share of the country's income, their share of total taxes also jumped from 35% to 38%. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.