S.E.C. Head Admits Misstep in Madoff Ethics Issue

WASHINGTON (Reuters) — The chairwoman of the Securities and Exchange Commission, Mary L. SchapiroBernard L. Madoff. , told lawmakers on Thursday that the S.E.C. should have gone beyond what was required under ethics rules after the agency’s top lawyer disclosed that his mother had invested with

Ms. Schapiro discussed the issue before the House Oversight Committee, which is examining whether the agency’s former general counsel, David M. Becker, should have recused himself from advising the S.E.C. on matters related to Mr. Madoff, including how to compensate victims.
Mr. Becker had inherited money from his late mother, who had invested with Mr. Madoff. Becker has told lawmakers he was given the green light to work on Madoff matters from the agency ethics lawyer.

“While Mr. Becker did solicit and follow advice from the ethics counsel, I realize in light of this incident that as chairman I have to ensure that we go beyond what may be required in any particular situation,” Ms. Schapiro said.
Questions about Mr. Becker arose last month after Irving H. Picard, the trustee overseeing the Madoff case, sued him and two of his brothers to recover $1.5 million of the $2 million they had inherited in 2004 from a Madoff investment by their late mother. Mr. Becker’s financial ties to Mr. Madoff had not been publicly disclosed until that suit.

The revelations have raised fresh questions about ethical standards and practices at the agency, where Ms. Schapiro was brought in as chairwoman two years ago with a mandate to strengthen its enforcement unit.

Last Friday, H. David Kotz, the agency’s inspector general, announced that he would investigate the potential conflicts in Mr. Becker’s role as a Madoff recipient who was also the S.E.C.’s general counsel and senior policy director involved in decisions relating to the Ponzi scheme.