A former general counsel at the Securities and Exchange Commission, along with his brothers, has settled a lawsuit relating to income derived from the Bernard Madoff Ponzi scheme.

The SIPA Trustee for the liquidation of Bernard L Madoff Investment Securities filed a motion for approval of the $556,017 settlement with the sons of Dorothy Becker, including former SEC general counsel David Becker, in the United States Bankruptcy Court for the Southern District of New York.

The details of the case are that Dorothy Becker held an account with Madoff’s firm, the balance of which was withdrawn after her death in 2004 and deposited into an estate bank account - well before the 2008 discovery of Madoff’s fraud.

The settlement comes after a decision in November from the US Department of Justice not to investigate whether David Becker had a conflict of interest in taking part in discussions over payouts to Madoff victims while simultaneously having a financial stake in the outcome, Reuters reported.

That followed an earlier accusation from the SEC’s inspector general, David Kotz, that due to David Becker’s inheritance of Madoff funds, worth roughly $2 million, such a conflict existed, according to the report.

David Becker has reportedly denied any wrongdoing, claiming that he disclosed the stake to the SEC’s chief ethics officer and its chairman.

“Today’s settlement represents the recovery of an amount equal to 100 per cent of the subsequent transfers received by the sons,” said the SIPA Trustee’s statement.

“The Trustee believes that this settlement represents the best possible outcome for BLMIS customers with allowed claims. It avoids the uncertainties involved in reopening the Becker estate – a time-consuming, expensive and difficult undertaking under Massachusetts law – and the risks and delays of litigation,” it continued.