The lawsuit was filed by Irving Picard against David Becker, reports the Daily News. The suit claims Becker never disclosed his family earned more than $1.5 million in profits from investments with Madoff.
Becker is the SEC's general counsel and senior policy director; he was named to the post less than two months before Madoff's bust in December 2008. He's returning to the private sector next week.
Becker and his brothers were named executors of their mother's estate, which included a Madoff account, reports the News. They liquidated the account in 2005, withdrawing $2 million, according to the paper.
"The . . . investigation has revealed that $1,544,494 of this amount was fictitious profit from the Ponzi scheme," the Manhattan Bankruptcy Court filing says, according to The New York Post.
SEC spokesman John Nester says Becker had no involvement in his parents' financial affairs -- a contention Becker personally asserted to the Post.
"This is about my parents' investments. I had nothing to do with my parents' investments," Becker told the paper.
He also insisted he had no idea that Madoff was running a fraud and denied the existence of allegations of criminal wrongdoing by either himself or his siblings.
"There's no allegations of wrongdoing on anyone's part other than Madoff," Becker told the Post.