Greetings-
Congress is back in town after the August recess, and action important to investors is picking up both in Congress and in the Courts. Moreover, as Congress seeks to alter the increasingly strong perception of dysfunction, it is hoped that it will finally move to provide relief. The fact that the court decisions and legal process have been damaging to thousands of victims puts greater emphasis on NIAP’s actions in Congress.
Washington, DC Update
Guns Turned On SEC. At least three significant committees (House Oversight, House Financial Oversight, Senate Judiciary) are placing the SEC (central to both Madoff and Stanford frauds) in their crosshairs to investigate conflicts of interest and destruction of key documents. Investors are aware of the extraordinary and repeated failures of the SEC to identify and expose the two largest investment frauds in US history (Madoff, Stanford), despite their being on notice. What’s coming to light are issues regarding the revolving door at the SEC to private industry, willful destruction of documents on investigations, the conflicts of interest regarding having a Madoff victim as chief counsel to the SEC, among other issues.
In addition, the House Capital Markets Subcommittee Chair Scott Garrett is awaiting the results of a General Accountability Office investigation into the SEC’s handling of the Madoff fraud. Also, the Inspector General’s Office, which already provided lengthy and scathing critiques of the SEC in both Madoff and Stanford frauds, is expected to shortly report on four other investigations of the SEC including former SEC Chief Counsel David Becker and the allegations of document destruction. As many know, The SEC’s Mary Shapiro, OIG David Kotz, and David Becker were grilled in front the House Government Oversight Committee last week. At that hearing, Congressman Garrett challenged the SEC by alleging that the decision-making was motivated by protection of the SIPC fund, and not the investing public.
When an entity fails to the degree the SEC has, it must be held accountable for its actions. Many allege the SEC has worsened the plight of victims by succumbing to pressure by the Trustee and SIPC in its legal positions operating without transparency and doing nothing to assist victims in obtaining relief after all its failures. To this day, there have been no reported firings at the SEC for these dismal failures.
Which brings us to HR 757, the Equitable Treatment of Investors Act. The Garrett Subcommittee is expected to pick up on this legislation in the coming weeks in anticipation of October hearings. We will keep you posted on this important legislation, in addition to any new information we’re able to obtain regarding the tax relief legislation, HR1635.
Click here for an update on Congressman Ackerman’s HR1987 legislation, and NIAP’s position.
Click here for an update on Congressmen Pascrell and Boustany’s HR1635 Tax relief legislation.
Legal Update
The Courts. Briefly, a flurry of legal actions are under way of importance to all investors. Expected shortly is activity dealing with investor rights, particularly regarding whether a SIPC Trustee has the right to sue innocent investors for the return of assets (also known as “clawback”). This past Friday, the district court, under Judge Rakoff, decided to remove the case from the bankruptcy court. We also await information regarding the Mets’ owners, already withdrawn from bankruptcy court. In another important case regarding SIPC’s right to invalidate investors’ statements – the “net equity” issue, attorneys representing investors in the recently decided U.S. Court of Appeals decision have requested the case be heard by the Court’s entire panel of judges (“en banc”). As always, we’ll keep investors apprised of these actions.
(For those interested in a brief analysis of the Appellate Court Net Equity decision, check out Dean Larry Velvel’s blog here.)
NIAP is deeply committed to holding financial institutions such as JP Morgan Chase accountable for turning a blind eye and further fueling investment fraud. For more information on this, and NIAP’s Amicus Brief filed on “red flags”, click here.
Upcoming Activity & Help Needed
Over the next month, we expect the Inspector General’s report on the actions of the SEC, and for possible Congressional hearings of HR757 and related issues, including the SIPC Modernization Task Force. Some early findings of the GAO report on the SEC are also expected to become available.
Once Congressional hearings get underway, we must step up our grassroots efforts to spur support and passage of HR757. In addition, we will seek to evolve our strategy of support for HR1635 – legislation intended to provided additional tax relief. It is important for investors to identify friends and family members they can reach out to for support of these bills.
Only 3 days left for our NIAP matching contribution campaign. As investors must increasingly look to Congress for relief, we are under greater pressure to see these efforts through to success. We can’t do this on desire alone. We need funds to provide staff, cover costs of communications, and essential PR and lobby efforts. Please help.
Click here for more information on how you can donate, and be sure to check out our new investor action center, which is central to our upcoming grassroots letter writing campaign.
Thanks so much.
In Peace,
Ron Stein, CFP
