Legal News

SEC to Probe Relationship Between Madoff?s Niece and Ex-SEC Lawyer

By Dan Slater

I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them.
– Christopher Cox, SEC Chairman, referring to the Commission’s failure to investigate Bernard Madoff

The SEC’s review of its own oversight (or lack thereof) of Bernie Madoff’s securities-trading and investment-management firm will cast a spotlight on two lawyers who apparently began dating in 2006, fell in love and married last year.

Bernie Madoff’s niece, Shana Madoff (the daughter of Bernie’s brother, Peter) went to University of Michigan and then to Fordham law school in the early 90’s. After law school, she joined her father, Peter — also a Fordham law grad as well as the senior managing director of the Madoff firm — and her uncle. Shana became the in-house counsel of the firm her uncle founded. And shortly thereafter, in 1997, Shana, then 26, married Scott Ira Skoller (not a lawyer, far as we know) who at the time was the sales manager at Tyrone, a men’s clothing store in Roslyn, N.Y.

But Shana (pictured) and Scott didn’t last, it seems. And in 2006, she met Eric Swanson (U. of Minnesota, Hamline law), who worked at the SEC for 10 years, including as a senior inspections and examination official, before leaving in 2006. Among Swanson’s duties, reports the WSJ, was supervising the SEC’s inspection program in charge of trading oversight at stock exchanges and electronic-trading platforms. (The WSJ cites a press release from Bats Trading Inc., an electronic stock exchange that hired Swanson as general counsel earlier this year.)

SEC Chairman Cox said the commission will investigate “all staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by staff regarding the firm.” Neither Shana nor Eric is named in the SEC statement as a target of the probe. Yet, David Kotz, the SEC’s inspector general who’s leading the probe, told the Journal that he intends to examine the relationship between Shana and Eric.

So did Eric Swanson’s relationship with Shana Madoff affect the SEC’s investigation of the Madoff firm? Who knows? But a spokesman for Swanson told the New York Times that Swanson’s “romantic relationship with his wife began years after the compliance team he helped supervise made an inquiry about Bernard Madoff’s securities operations.” And Randy Williams, a spokesman for Swanson’s current employer, BATS Exchange, said that Swanson had not participated in any inquiry into the Madoff firm or its affiliates while he was involved in a relationship with Shana.

Full post as published by Law Blog - WSJ.com on December 17, 2008 (boomark / email).