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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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 [...]
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 [...]
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 [...]
H.R. 3482 – New Co-sponsor
Congressman Alcee Hastings [D-FL20] has signed onto H.R. 3482 – Restoring Main Street Investor Protection and Confidence Act.
If your representative is not currently a co-sponsor (click here for a list of current co-sponsors), please call or write them to urge them to join in supporting this legislation. You can use our letter writing tool at www.fixsipcnow.org to submit your letter [...]
H.R. 3482 and S.1725, Restoring Main Street Investor Protection and Confidence Act serves to benefit McGinn-Smith victims as well. As indicated in Senator Schumer’s Press Release:
” In the case of the McGinn-Smith, Schumer’s plan would require SIPC to compensate the 900 investors that suffered $136 million in total losses, if the SEC refers the case to SIPC. Schumer has urged the SEC numerous times to refer the McGinn-Smith case to SIPC, but the SEC declined to do so after its referral of a case with similar facts – the Stanford Financial Group case – was overturned in court. Schumer explained that if his legislation gets passed, he would again urge the SEC to refer the McGinn-Smith case to SIPC, and argued that the similarity to the Stanford case, which the SEC did refer to SIPC, would give McGinn-Smith victims a strong argument on the merits. Schumer’s bill would also provide the SEC with additional flexibility to determine who qualifies for SIPC protection, which will help encourage their referral. Thus, Schumer’s legislation would open the door for McGinn-Smith victims to seek remuneration from SIPC.”
McGinn-Smith victims – we encourage and invite you to join NIAP – Network for Investor Action and Protection, and together we can move this much needed legislation forward. Click here to join – membership is [...]
Deliberations resume Tuesday morning in a federal court after a jury deliberated for a second full day without coming to a verdict in the case of Timothy McGinn and David Smith. The embattled long-time Albany business partners could face up to 30 years in prison on the top counts of a 30-count indictment charging them with conspiracy, wire and mail fraud, and tax evasion. More in the Albany Times-Union [...]
