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Will SIPC’s Brokerage Insurance Scam Help Allen Stanford Walk?

If you experience an insured loss and the insurance company doesn’t pay, you know you’ve been scammed. As I’ve discussed in a series of columns posted at www.kotlikoff.net, SIPC (the Securities Investor Protection Corporation) is running an enormous scam in claiming to insure our brokerage accounts against fraud. SIPC’s refusal to pay the legitimate claims of most Madoff victims and all Stanford victims makes this abundantly clear. Even worse, SIPC is placing all brokerage account holders at enormous additional risk by standing ready to sue them if they earn a return on their investments and spend the proceeds. In fact, thanks to precedents SIPC established in the Madoff case, SIPC can declare the loss of your securities to be the result of a Ponzi scheme and sue you for up to every dollar you withdrew in the up to six years prior to the fraud’s discovery! More on Forbes [...]

SIPC’s Brokerage Insurance Scam of Allen Stanford’s Victims — Another Reason to Close Your Brokerage Account Now!

Imagine you invest with a broker whose front doors, office plaques, coffee mugs, pencils, brochures, stationery, folders, office signage, and emails all proclaim that your investments are insured by SIPC – Wall Street’s so-called “Securities Investor Protection Corporation.” Your broker tells you the stock market is overvalued. But he has a very safe, moderate-yield investment opportunity that entails purchasing certificates of deposits. More on Forbes [...]

ALERT:

H.R. 3482 – Restoring Main Street Investor Protection and Confidence Act
New Co-Sponsor: Representative Christopher Smith [R-NJ4]. This brings the number of co-sponsors to date to 51. If your representative is currently not co-sponsoring H.R. 3482 (click here for a list of current co-sponsors), we urge you to visit www.fixsipcnow.org to write your representative, and follow up with a call to their [...]

SIPC’s Brokerage Account ‘Insurance’ Scam: Take It from a Comptroller of the Currency

SIPC’s Brokerage Account ‘Insurance’ Scam: Take It from a Comptroller of the Currency

I’ve invited James Smith, former Comptroller of the Currency and former Deputy Under-Secretary of the U.S. Treasury to discuss the Insurance Scam being run by SIPC. As I’ve discussed in prior columns posted at www.kotlikoff.net, this scam puts all brokerage account holders at extreme risk. Indeed, I strongly recommend every brokerage account holder close her account immediately pending passage of H.R. 3482 and S. 1725. I also strongly recommend that all SIPC-insured brokerage firms immediately disclose the huge risk to their clients of SIPC “insurance,” specifically that if they withdraw and spend enough of their account balances, they can a) lose any claim to SIPC insurance coverage on their remaining balance and b) also be sued for every penny they legitimately withdrew over the six years proceeding the discovery of fraud in their brokerage account. To avoid its insurance obligation and sue legitimate brokerage account investors, SIPC need only declare the fraud a Ponzi Scheme, which is easily done and which, as the NY Times, recently reported, are a dime a dozen.

Take It From a Comptroller of the Currency:

Congress Needs to Act Now to Protect Investors from SIPC “Insurance”

by James E. Smith

On September 25, 2000, eight years before the scams of Bernard Madoff and R. Allen Stanford were uncovered, Gretchen Morgenson (financial journalist for the New York Times) wrote a perceptive column of exacting detail describing the Securities Investor Protection Corporation’s pinched and adversarial practices aimed at favoring the SIPC Fund over protecting innocent customers of failed broker dealers. That column was “dead on” concerning SIPC’s regrettable culture, in which litigation rather than protection is too often the order of the day.

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Kotlikoff: Investors at Risk of Wipeout, SIPC a Fraud

Economist Laurence Kotlikoff is calling on all Americans to close their brokerage accounts immediately because of the risk of a total wipeout — a risk he says stems from a massive Wall Street insurance scam perpetrated by the Securities Investor Protection Corp. (SIPC). “SIPC, a brokerage ‘insurance’ arm of Wall Street, has been and remains today engaged in insurance fraud,” Kotlikoff told ThinkAdvisor in a telephone interview. “SIPC claims to insure brokerage accounts. Nothing could be farther from the truth. What it’s really doing is placing all brokerage account holders at extreme risk.” More on ThinkAdvisor [...]

Kotlikoff: Investors at Risk of Wipeout, SIPC a Fraud

Economist Laurence Kotlikoff is calling on all Americans to close their brokerage accounts immediately because of the risk of a total wipeout — a risk he says stems from a massive Wall Street insurance scam perpetrated by the Securities Investor Protection Corp. (SIPC). “SIPC, a brokerage ‘insurance’ arm of Wall Street, has been and remains today engaged in insurance fraud,” Kotlikoff told ThinkAdvisor in a telephone interview. “SIPC claims to insure brokerage accounts. Nothing could be farther from the truth. What it’s really doing is placing all brokerage account holders at extreme risk.” More on Think Advisor [...]

Stanford Losses Not Covered by SIPC, Appeals Court Rules

The U.S. Securities and Exchange Commission can’t force a brokerage account insurer to pay victims of R. Allen Stanford’s $7 billion fraud because their purchases weren’t covered, an appeals court ruled. The U.S. Court of Appeals in Washington said the 7,000 investors in certificates of deposit sold by Stanford didn’t qualify as customers of a brokerage who would be insured by the Securities Investor Protection Corp., as the SEC argued. The CDs were bought at Antigua-based Stanford International Bank LLC, which wasn’t a SIPC member, the court said. The Stanford case is the first in which the SEC has gone to court to force SIPC to extend coverage. SIPC, a nonprofit corporation funded by the brokerage industry, has come under criticism from U.S. senators for allegedly favoring its Wall Street members over fraud victims in recent years. More on Bloomberg [...]

ALERT:

H.R.3482 New Co-sponsors– Congressman Michael Burgess [R-TX26] and Congresswoman Carol Shea-Porter [D-NH1} have signed onto support H.R. 3482 – Restoring Main Street Investor Protection and Confidence Act.

If your congressional representative has not yet signed on to H.R.3482 (click here for list of current co-sponsors), please call and write your representative urging they take action and sign on. Visit www.fixsipcnow.org to submit your letter on-line and for your representative’s contact information.

S.1725 New Co-sponsors – Senator Mark Pryor [D-AR] and Senator Bill Nelson [D-FL] have signed onto support S.1725 – Restoring Main Street Investor Protection and Confidence Act.

If your Senator have not yet signed on to S.1725 (click here for the list of current co-sponsors), please call and write your Senators urging they take action and sign on.

Click here to submit your letter on-line and for your Senator’s contact [...]

The Huge SIPC Risk Your Broker Isn’t Disclosing

Your broker has a duty to disclose all risks from investing with him and his company. He also has an obligation to tell the truth. If he misleads you, including failing to disclose a major risk to your investment, you can sue him personally. There is one huge investment risk that your broker is surely not disclosing. It’s the risk arising from SIPC, the so-called Securities Investor Protection Corporation. And there is one extremely serious misrepresentation he surely is making, namely that your brokerage account is insured by SIPC. Falsely claiming that you are insured represents financial fraud. Let’s start with three basic facts. More on Forbes [...]

Will Congress keep your investments safe? Maybe. maybe not

The passage — or failure — of a single piece of legislation is going to tell us a lot about whether Congress represents the people of the United States or just its financial service industry donors. The legislation is the Restoring Main Street Investor Confidence and Protection Act, HR 3482 and Senate bill S.1725. The website govtrack.us gives the bill only a 23 percent chance of passage. So we have a good test, right now, of whether the folks we vote for actually represent us. Here’s the story: The Restoring Main Street Investor Confidence and Protection Act would define the value of a person’s brokerage account — the net equity — as the value of the account based on the last statement from the brokerage house. More on Chron.com [...]