The Network for Investor Action and Protection believes Judge Lifland’s decision in New York Bankruptcy Court is short-sighted and potentially damaging to individual investors and confidence in the financial markets. This process is shedding light on how weak and unreliable individual investor protection is in America.
The notion that the Securities Investor Protection Corp. can only provide payouts to the extent that it is able to recover lost funds is contrary to SIPC’s purpose. SIPC’s role is to protect investors who are victims of theft by member institutions. The $500,000 protection is supposed to be there whether SIPC recovers property from the broker-dealer or not.
Additionally, the idea that a broker-dealer statement is not sufficient to provide reasonable expectations of securities positions held by individual investors is flawed. Individual investors have no other access to documents that can provide them with such expectations and they rely wholly on those statements since the broker technically holds those securities. They have no choice but to believe those documents.
This ruling also raises questions over how markets would respond to investors learning that SIPC only protects an investor’s actual investment should the broker-dealer become insolvent due to theft fraud or a Ponzi scheme.
NIAP believed all along that the New York Bankruptcy Court ruling would be just the beginning and fully supports an appeal of this ruling. This reinterpretation of the SIPA law is a blow to investor protection and confidence, and we are prepared to support this court battle as far it needs to go. We are alarmed by how little weight was given the arguments made in favor of the victims in the court’s brief.
About the Network for Investor Action and Protection (www.investoraction.org)
The Network for Investor Action and Protection (NIAP), is a not-for-profit organization founded by former investors of Bernard L Madoff Securities Inc. (BLMIS). An advocacy group for all victims of investment frauds, NIAP supports regulatory reform to enforce effective policing for the prevention of future investment and securities fraud, and improved and proper support for all victims currently suffering from the unfortunate and potentially devastating fallout from this type of crime.
Sourced from: Madoff Help News & Assistance
