NIAP Press Release - November 14th, 2013

Contact: Caroline Ward


Washington, DC. — The Network for Investor Action and Protection (NIAP) is pleased to announce today its support of H.R. 3482, “The Restoring Main Street Investor Protection Act of 2013,” jointly introduced by Representative Scott Garrett (R-NJ) and Representative Carolyn Maloney (D-NY). This bill was designed to enhance protections for investors who are customers of regulated broker-dealers and restore confidence in U.S. financial markets. The bill was drafted in response to the deficiencies exposed as a result of the Madoff, Stanford, and other recent theft-frauds. Similar legislation is expected to be introduced shortly in the Senate, and a House hearing is set for November 21, 2013. NIAP is working closely with the Stanford Victims Coalition, and the recently formed Investor Protection Alliance, to help spur passage of this legislation.

The objective of H.R.3482 is to reaffirm original Congressional intent of the Securities Investor Protection Act (SIPA) and related legislation, to protect the regular investors of regulated broker-dealers, and to provide certainty by proposing a series of reforms that: assert the validity of investment statements issued by SIPC members; achieve greater fairness for victims of fraud; prevent clawback of innocent investor customers; assure prompt relief from the Securities Investor Protection Corporation (SIPC) Fund; affirm the independence of the Trustee from SIPC-interests; reduce the likelihood of a “bailout” of private interests by the U.S. Treasury; and assert the Security Exchange Commission’s (SEC) plenary oversight authority in SIPC cases.

Ron Stein, President of NIAP, applauded the bipartisan effort: “The relentless efforts of Representatives Garrett and Maloney – and their committee members – to bring fairness and justice to the victims of the Madoff and Stanford debacles and enhance protections for all investors have to be commended.”

Stein, also a Certified Financial Planner and Investment Advisor, continues, “More than ever, increasing trust and confidence is key to investors who depend on their brokers for protecting their life’s savings. But by strengthening protections for investors and enhancing investor confidence, this legislation helps the industry as well, and the industry should jump at the opportunity to embrace it.”

Brokerage failures due to theft-fraud, as in the Madoff and Stanford cases, shone light on the inadequacies of SIPC. SIPC, an insurance-like safety net, is supposed to protect investors should all other protections fail. With over half the Madoff customers being denied any SIPC relief, over 1000 being sued by the SIPC Trustee, and over 80% of relief funds going to institutional investors, the Madoff Case is one sad example of SIPC and the SIPC-appointed Trustee ignoring Congress’ intent by putting the interests of institutional, professional investors and the SIPC Fund over those of the smaller investors Congress originally intended to protect. Furthermore, had SIPC promptly alerted Congress to this untenable result, five years of trauma and legal fees for innocent fraud victims and close to a billion dollars in legal fees to the Trustee and his consultants could have been avoided.

The Stanford victims have also suffered, having entrusted their assets to a SIPC broker-dealer, and thus far been similarly denied SIPC protection — in this case because SIPC has refused to adhere to the SEC’s authority. This legislation reiterates Congress’ intent to have the SEC oversee the activities of SIPC, an industry-run entity.

The Network for Investor Action and Protection, INC., is a New York Not-For Profit Corporation, formed to advocate for enhanced protections for general investors, and support victims of securities fraud and other fraudulent activities by empowering them to seek appropriate redress for their financial and emotional injuries through education, advocacy for legislative and judicial solutions and maximization of restitution.

For more information, please visit or call 631-425-0770


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