Securities lawyers come to defense of former top SEC lawyer tied to Madoff


Becker has been at the center of a whirlwind of controversy for months, ever since it was revealed that he and his brothers inherited funds that at one time were invested with Madoff, who defrauded investors of billions of dollars. A reported released Wednesday by the SEC's inspector general found that Becker helped craft the agency's response to Madoff-related claims even though it could have directly affected his financial position, and has referred its findings to the Justice Department for potential criminal violations.

Becker, alongside SEC IG David Kotz and SEC Chairman Mary Schapiro, is slated to testify about his work at a joint congressional hearing Thursday.

A key critique of Becker is that he advocated for a compensation approach for Madoff victims that could have made clawback suits against investors who made gains on the fradulent investments — including Becker's parents — less likely.

The IG report called on the SEC to reconsider how to compensate Madoff victims. Schapiro agreed with the recommendation, but also praised Becker as a "talented, highly skilled lawyer and a dedicated civil servant."

Becker, who left the agency earlier this year, has defended his actions in the past, noting that he advised SEC officials about the connection and was told they did not constitute a major conflict of interest. But the IG report found that the SEC ethics office based its verdict on "incorrect assumptions" about the role the agency was playing in the Madoff matter.

In a draft version of the letter, the securities attorneys argue Becker is "being crucified" over the "relatively miniscule" size of his financial stake tied to Madoff, given the major pay cut he took to return to the SEC for a second stint as general counsel.

Based on publicly disclosed profit figures, the move back to the SEC in 2009 cost Becker more than $2 million a year. While the Becker brothers inherited $1.5 million in funds tied to Madoff, any financial advantage Becker could have gained by swaying the SEC's handling of Madoff victims would amount to roughly $138,500. That amount would then be divided between Becker and his two brothers.

"After giving up over $4 million, he is now being attacked over a perceived $34,600 possible advantage," the draft stated. Those details were later removed from the version sent to lawmakers.

The letter was spearheaded by Stephen Crimmins, a partner at K&L Gates LLC who previously spent a decade and a half at the SEC, including several at the same time as Becker. He also was chosen by Democrats to be a witness at the first congressional hearing devoted to the Becker matter back in March. Schapiro told lawmakers at that hearing that she wished Becker had recused himself from the Madoff work.