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Should States Compensate Ponzi Scheme Victims? Montana and New Hampshire Think So.

In the nearly five years since Bernard Madoff’s infamous swindle was revealed to the world, Ponzi schemes have filled news headlines at an alarming and increasing frequency. While paling in comparison to the estimated $17 billion lost by Madoff’s victims, the losses incurred in each scam and stories of devastation are real, as membership swells in the ‘club’ of those swindled by the gift of gab. Chances of any meaningful recovery are typically bleak; victims on average recover approximately five percent of their losses through the efforts of court-appointed receivers, bankruptcy trustees, and government regulators. While restitution is often ordered by the scheme perpetrators, these obligations are typically nothing more than formalities as the scheme collapse nearly always results from a lack of funds. The experience is a painful and often life-altering lesson for those unfortunate enough to be involved. More on Forbes [...]

Details emerge from MF Global bankruptcy plans

NEW YORK, (Reuters) – MF Global Holdings revealed new details about its proposed bankruptcy plan in court papers filed on Friday. Initial members of a director selection committee led by representatives of its hedge fund creditors have been selected. They will select board members for the company as it liquidates. The initial members are Andrew Shannahan, of Knighthead Capital LLC; Joe Kronsberg, of Cyrus Capital Partners; and Austin Saypool, of Silver Point Capital, according to one of the filings on Friday. More on Reuters [...]

Fairfield receives settlement on Madoff

A Stamford Superior Court judge entered a $2.88 million judgment March 15 in favor of the town of Fairfield against an investment firm that had placed the town’s retirement funds with Bernard Madoff. The judgment was against Maxam Capital Management, a Darien investment adviser that had sold the town’s two retirements plan an investment with Madoff in 2007. More in the Fairfield Sun [...]

Madoff Business Partner Kohn Says She Gave $60 Million to Family

Bernard Madoff’s European business partner, Sonja Kohn, told a U.K. court she gave $60 million from the convicted fraudster to companies and trusts linked to her family. Liquidators of London unit Madoff Securities International Ltd. are pursuing Kohn to recover fees she was paid to introduce European clients to his Ponzi scheme. She was ordered to come to a London court to answer questions about the assets. More on Bloomberg [...]

FINRA CEO Ketchum’s Speech And The Shortcomings Of Self Regulation

On March 14, 2013, the Financial Industry Regulatory Authority (“FINRA”) Chairman and Chief Executive Officer Richard G. Ketchum gave a speech to the Consumer Federation of America Consumer Assembly. In keeping with such things, FINRA published a transcript of Ketchum’s prepared remarks and I urge you to read it. I am not an unbiased commentator when it comes to FINRA or CEO Ketchum. As my published commentaries for many years clearly evidence, I am a critic of self regulation, of FINRA (and its predecessor the NASD), and of the Ketchum administration. More on Forbes [...]

Judge Demands Contract-Attorney Records In Madoff Fund Fee Fight

A federal judge in Manhattan this morning is scheduled to pry into the arrangements plaintiff lawyers have with contract attorneys who perform much of the grunt work in securities class-action cases but are paid a tiny fraction of court-awarded fees. Judge Colleen McMahon of the Southern District of New York will hear arguments over a $40.1 million fee that lawyers are seeking in exchange for recovering $219 million for investors who lost money through “feeder funds” that placed their money with Bernie Madoff. More on Forbes [...]

Manhattan U.S. Attorney’s Office names new appellate chief

The Manhattan U.S. Attorney’s Office appointed a new head of its appeals unit on Thursday following the confirmation of Katherine Failla, the division’s prior chief, as a federal judge. Michael Levy, who had been a member of the office’s securities and commodities fraud task force, will take over the unit, which handles cases before the 2nd U.S. Circuit Court of Appeals. Levy joined the office in 2002. He was part of the team that prosecuted former Mayer Brown partner Joseph Collins for his alleged participation in the $2.4 billion fraud at commodities broker Refco. A jury convicted Collins in November at his second trial. Levy also prosecuted former New York State Sen. Efrain Gonzalez, who was sentenced in 2010 to seven years in prison for using two non-profits to pay for his personal expenses. More on Reuters [...]

Accord between JPMorgan, MF Global parent gets court approval

A bankruptcy judge on Wednesday approved a settlement that will increase JPMorgan Chase & Co’s potential recoveries from the liquidation of MF Global Holdings to as much as 76 cents for every dollar in claims. The deal resolves a complaint from JPMorgan over the value of an intercompany settlement among MF Global affiliates. That complaint had posed a potentially significant obstacle to getting creditor support and court approval for MF Global’s payout plan. More on Reuters [...]

Stanford Receivers Reach Settlement with Antigua in Fraud Case

U.S. and Antiguan officials liquidating Allen Stanford’s offshore bank said they have reached a settlement that would return a substantial portion of $300 million in frozen assets to the victims of Stanford’s fraud, a court filing showed. Stanford was sentenced in June to 110 years in prison for bilking investors with fraudulent certificates of deposit issued by Stanford International Bank, his bank in Antigua. Ever since the Ponzi scheme was uncovered, U.S. and international authorities, including those in Antigua and the United Kingdom, have been fighting for control of Stanford’s assets outside of the United States. More on Fox Business News [...]

Financial Firms Fight CFTC Proposal Designed to Protect Customer Funds

Financial service firms are mounting an aggressive campaign to kill a proposal aimed at protecting customer funds in the event that a brokerage misuses its clients’ money to cover losses. The Commodity Futures Trading Commission’s draft rules have unexpectedly emerged as one of the most hotly lobbied issues this year because they would affect the trading of futures and swaps — financial derivatives that banks, agriculture and energy interests use to hedge market risk. Public confidence in the futures industry was shaken by the loss of $1.6 billion of customer funds in the 2011 collapse of MF Global Inc. and by the theft of more than $215 million from customers of the failed Peregrine Financial Group Inc. However, the industry maintains that CFTC efforts to restore trust in the market it oversees could bankrupt some firms by requiring brokerages to keep $100 billion or more in extra collateral to cover trading shortfalls. More on Roll Call [...]