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 After she died, the Becker brothers had withdrawn $2 million on behalf of the estate in 2004.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 16,960.57 -123.23 -0.72%
Nasdaq 4,449.56 -22.54 -0.50%
S&P 500 1,978.34 -9.64 -0.48%
Treasuries 2.47 -0.04 -1.59%
Data as of 1:40am ET
Company Price Change % Change
Facebook Inc 75.19 0.21 0.28%
Apple Inc 97.67 0.64 0.66%
Bank of America Corp... 15.59 -0.03 -0.19%
Ford Motor Co 17.62 -0.22 -1.23%
Applied Materials In... 21.23 -0.52 -2.41%
Data as of Jul 25

Sections

The rideshare app will launch in New York on Friday evening, as the city's taxi commission comes to terms with the technology. More

Americans with disabilities face huge financial hurdles and it starts early on, according to a recent report. More

Louisiana is now the top location for motion picture filming, supporting thousands of new jobs and small businesses. More

Americans with disabilities face huge financial hurdles and it starts early on, according to a recent report. More

Market indexes 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. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.