The Securities and Exchange Commission has formally proclaimed the independence of its Office of the Ethics Counsel as a stand-alone unit with in the agency. The head of the office, known as the Ethics Counsel, will now report directly to SEC Chairman Mary Schapiro instead of reporting to the Commission's general counsel as previously done.

Several rules in the Code of Federal Regulations governing the operations of the SEC were amended to allow the Ethics Counsel Office to act independently. Some of the changes made include eliminating the oversight functions of the General Counsel Office over the ethics department and mandating that the ethics counsel serve as counselor for the Commission and all its staff on issues related to ethics and conflicts of interest and act as the liaison on behalf of the Commission with other departments on ethics-related issues.

Back in February, the Commission was in the spotlight following a case involving its former general counsel, David Becker, which led to criticism that the government agency in charge of enforcing proper business conduct should have its own strong, independent ethics counsel, separate from the authority of the general counsel office.

Becker and his siblings inherited an investment account from their late mother. The account was formerly managed by ponzi scheme maestro Bernie Madoff. When the trustee overseeing the Madoff bankruptcy sued hundreds of Madoff investors to claw back money withdrawn from the firm, a lawsuit was filed, and Becker was named as one of the defendants.

During the proceedings, Becker consulted with the SEC's Ethics Office regarding his interest in his mother's estate on two occasions, and he was advised both times that there was no conflict. In the Commission's Inspector General report, however, the SEC expressed concerns about the role and culture of the Ethics Office at the time it provided the advice to Becker. Included in its reasoning was the fact that the ethics counsel with whom Becker consulted twice reported directly to Becker.