Deeply concerned about the massive bills the Bernard Madoff trustee is piling up and the failure of the Securities and Exchange Commission to perform any sort of oversight of his dealings, Rep. Peter King (R-N.Y.) has drafted a strongly worded letter to SEC chairwoman Mary Schapiro, requesting specific information on how the commission intends to change the system.
King's letter to Schapiro - which he expects to send Monday - and other watchdogs over the nation's securities business comes just over a week after the SEC's inspector general issued a report stating that fees to Irving Picard, the Madoff trustee, and the platoon of lawyers and accountants helping him unravel the biggest financial fraud in history, had already reached $288 million.
The fees are expected to exceed $1 billion by the time Picard's work is over.
Picard's fast-growing fees will ultimately have to be paid by the Securities Investor Protection Corp. (SIPC) - Wall Street's self-policing entity that recommended Picard for the job in the first place.
"As a member of Congress whose constituency has been disproportionately affected by the Madoff Ponzi scheme, I am concerned that the trustee may be driven by profit rather than the goal of ensuring that the defrauded investors are made whole," writes King, who has previous assailed Picard for "abusing his authority" for suing the owners of the Mets for as much as $1 billion, claiming they are among the Madoff investors who profited from the scam.
King has co-sponsored legislation with Rep. Scott Garrett (R-N.J.) seeking to provide greater protection for the average investor.
In the SEC's own report, Inspector General Mark Cahn acknowledged that "the SEC does not inspect SIPC's activities in any systematic fashion," and that the commission had no immediate plans to inspect SIPC in the near future.
King said the commission oversight failings were a "cause for serious concern."
Last month, Schapiro was called to testify at a Congressional subcommittee hearing about the conflicts of interest of David Becker, the former SEC general counsel.
Becker inherited Madoff money and is a defendant in a Picard lawsuit, and didn't recuse himself from dealing with Madoff-related affairs during his time with the SEC.