NIAP Press Release - 12/8/10

December 8, 2010


The Network for Investor Action and Protection today asked the Securities Investor Protection Corporation (SIPC) and the Trustee overseeing the Madoff Ponzi liquidation to explain why innocent investors are being targeted with clawback actions despite a series of lawsuits against guilty parties that should make innocent investor clawbacks unnecessary.

In a letter (click here) addressed to SIPC President Stephen P. Harbeck, SIPC Chairman Orlan Johnson and Trustee Iving Picard, NIAP President Ron Stein stated that the lawsuits the Trustee has filed against parties deemed complicit in the Madoff fraud should be more than adequate to fulfill the SIPC claims on the case. Stein added that suing innocent investors is unnecessary and compounding the significant pain Madoff victims have felt since many of them lost much of their net worth.

Picard has sued numerous entities he believes knew or should have known about the fraud for a total of more than $32 billion. According to the Trustee’s account valuation method, SIPC must satisfy claims totaling $5.8 billion.

“The Trustee has said he must sue investors to recover monies to give to so-called net losers,” said Stein. “Having already sued guilty parties for over $32 billion to cover only $5.8 billion in claims, why is it necessary to also sue innocent people, who often are aged, many who are suffering tremendous economic stress and emotional distress, and cannot even afford lawyers?”

“Even if the Trustee has a right to sue the innocent, something we dispute, why doesn’t the Trustee exercise his discretion to not sue them?” Stein asked.

NIAP is also concerned that the vast excess in already-sought recoveries over claims– which the Trustee and SIPC say need satisfaction–also raises the questions of what will happen to recoveries in excess of the claims, including who would receive funds and what the amount would be. The NIAP letter also asserts that based on SIPC’s own response to Congress in September, 2010 nearly 80% of the funds recovered will go to the wealthiest Madoff investors with accounts over $10 million.

About NIAP (

The Network for Investor Action and Protection (NIAP) is a not-for-profit organization. Founded by former investors of Bernard L Madoff Investment Securities Inc, NIAP seeks to enhance protections for all investors, while pressing for relief for innocent victims of Ponzi frauds.

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