UPDATE AND BATTLE STRATEGY ON GARRETT LEGISLATION
Hi All –
So here we are in the middle of something many have dreaded for a long time – clawback. The Trustee and SIPC have followed their ghastly course of action in serving complaints indiscriminately against both the innocent and the culpable. We have fought mightily against this for a long time, and we will continue to do so. We see the battle in Congress as an adjunct to the battle in the courts , with oral arguments on Net Equity to take place on March 3. Whether or not reason prevails in the courts, it is clear that the realm of investor protection demands comprehensive and critical changes from the halls of Congress or more will suffer.
The good news is that new legislation will shortly be introduced by the new House Capital Markets Subcommittee Chairman, Scott Garrett (R-NJ). Similar to the “marker” legislation introduced in December, this bill will address three basic aims: 1) prohibit clawback of innocent investors while empowering the Trustee to pursue those culpable, 2) reiterate the critical nature of the account and confirmation statement as a representation of value of assets held, and 3) eliminate the conflict of interest inherent in what amounts to the current selection of the Trustee by SIPC. We expect this introduction within the next few weeks, delayed somewhat by the Republican Conference getting their affairs and priorities in order.
In coming discussions I’ll talk about the tax issues, issues involving indirect investors, and other investor protection ideas. I’ll also discuss the upcoming March 3 hearings on Net Equity in the Appeals Court and organizing efforts around those hearings over the next week. Right now, let’s talk SIPC and Garrett, and the battle at hand.
We believe that we are better positioned with this bill than with prior efforts. Congressman Garrett is clear in his dismay with SIPC’s and the Trustee’s behavior. He is smart, thoughtful, and determined to make a mark as he leads a major part of the post-financial reform legislation in Congress. Furthermore, NIAP’s lobby efforts have expanded to include an additional firm. Critically, our key lobby firm – the Smith Free Group — has had a close working relationship with Congressman Garrett’s staff on this issue for a long time and will continue to play a key role going forward.
Our lobby firm and the Congressman’s staff have agreed on a broad grassroots strategy that begins with maximizing sponsorship of the new Garrett bill when it is introduced. As you know, Ilene and DJ have been working hard to bring forum members and volunteers to prepare for this effort. (Feel free to contact either DJ or Ilene for additional information.) Multiple letters and faxes will be needed over a period of time, probably over several months. If you feel the need to do something today, while it doesn’t hurt to send letters to your representatives urging them to look for a bill from Congressman Garrett to help protect investor victims, it will be even more important for you to write the letter following the introduction of the bill. NIAP will post all the information you will need to write the letter, including templates and Congressional contact information.
We are keenly aware of the time pressures involved — investors who are being subjected to the travesty of clawback are desperate for legislative relief. We suffer together in this, and Congressman Garrett is being kept abreast of the activities and what victims are experiencing. His sympathies are with us.
So here’s the plan.
As stated in a prior update from Ilene, we must think of this as a marathon – not a sprint. Victims should plan on writing letters on multiple occasions and reaching out to others – particularly family members – to do the same. It will take a modest amount of work, but the potential rewards are more than worth the effort.
Our lobby firm feels we can succeed in this. I do, as well. I have seen the faces of Congressional staff members as they begin to understand our logical counters to the Trustee’s press bites. NIAP believes our legal arguments in the courts will be strong, but also sees the potential impact that Congress can have on the courts as well. Even short of passage, a strong statement by Congress can have impact. Congress has the ability to put this right, and we will do all in our power to make that happen.
But we can only do this with your help. The actions that SIPC and the Trustee are undertaking are contrary to the principles of protection our financial system is based on. They are contrary to the principle of fairness that our society was built upon.
So let’s start now. Get mad. Mobilize. If you prefer not to wait until the legislation is submitted, that’s ok. Feel free to get a letter to your Congressman now, but the critical letter will be the one written once the bill is introduced, and, as always, we will have templates on the NIAP site. If you have some spare time and energy and want to help in the effort to get as many letters as possible written, call on three friends or family members, victims or not, to do the same. If each of us causes 3 or 4 letters — that’s several thousand letters to Congress. A few phone calls can turn three letters into 10 or more, and those in turn generate even more.
Congress does not make its letters public, there is literally no downside to writing a letter. There will be no retribution. Inaction is the worst thing you can do when even a small act is what’s needed now. Let’s fight our best fight on all fronts. Help us help you.
Ron Stein
For information on how you can easily help the cause, please contact Ilene (ilenek@investoraction.org) or Dj (admin@investoraction.org) or by phone at (631) 425-0770.
Ron Stein
