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LEGISLATIVE ALERT - SIPC LEGISLATION REINTRODUCED TO HELP MADOFF, STANFORD, AND MCGINN SMITH INVESTORS

HR 1982 – RESTORING INVESTOR PROTECTION & CONFIDENCE ACT OF 2015
INTRODUCED BY CONG GARRETT & MALONEY WITH OVER 40 ORIGINAL CO-SPONSORS

After months of anticipation, Capital Markets Subcommittee Chairman Garrett and Congresswoman Maloney announced the reintroduction of the long-awaited SIPC legislation that promises SIPC protection for all investor customers of broker-dealers, and relief for thousands of innocent Madoff and Stanford victims. The legislation is precisely the same as what was introduced in the 113th Congress, and retains the original name: The Restoring Main Street Investor Protection and Confidence Act.

With 41 sponsors joining Garrett and Maloney, and a majority of Republicans on the Financial Services Committee on board, the legislation is now poised to move through the Financial Services Committee for the first time, and to the House Floor for a vote. The timetable has not yet been resolved.

What makes this situation different than the last Congress is that FSC Chairman Jeb Hensarling, unwilling to let the bill go to a vote in his committee in the last Congress, is prepared to let the legislation move in the current session. Now, with even greater support among the parent Financial Services Committee that at any prior time, and with Garrett’s strong leadership on the bill, the prospects of success are increased.
While we expect the bill to go through changes, Madoff and Stanford victims now must prepare to put the grassroots pressure on, and work closely with the Investor Protection Alliance – comprised of NIAP and the Stanford Victims Coalition – to help move this legislation forward. We will need all the possible resources we can gather, and funds will also be needed to help facilitate success on the House floor, and then again in the Senate where the prior Senate bill was automatically reintroduced in January by Senator Vitter.

This bill stops clawback of innocent investors, provides $500,000 in SIPC benefits to investors based on final account statements, and gives the SEC authority, as Congress intended, over SIPC.

We ask that you please stay tuned as we turn our attention to a ramped-up grassroots effort. We will need your help. This bill comes at a critical time as Madoff victims, in particular, are being pummeled by painful and costly mediation sessions as the Trustee mercilessly presses forward on collecting funds in his clawback lawsuits.

Stay Tuned! Get excited! Get involved!

For more information contact NIAP at:
Phone: (800) 323-9250
Email: admin@investoraction.org

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Madoff Trustee Passes Halfway Mark in Repaying Ponzi Victims

The trustee unwinding Bernard Madoff’s $17.5 billion fraud is passing the halfway mark in his quest to repay victims, after an appeals court ruling freed up more cash. Former customers of the convicted con man are set to receive a new round of payments totaling $1.25 billion — the second largest such distribution since the biggest Ponzi scheme in U.S. history unraveled more than six years ago. The payout, which needs approval from the federal bankruptcy court in Manhattan, will boost the amount returned to victims to about $8.22 billion — or more than half the lost principal of approved claims totaling $13.6 billion, the trustee, Irving Picard, said Wednesday in a statement. More on Bloomberg Business here.

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U.S. Plans Stiffer Rules Protecting Retiree Cash

Federal regulators on Tuesday proposed rules, more than four years in the making, to provide greater consumer protection for retirement savings, requiring a broader group of investment professionals to act in their customers’ best interests when handling their retirement money. The financial services industry can be a minefield for ordinary investors, who often cannot tell whether their advisers are putting the investors’ interests first; the legal term for this is fiduciary duty. The rules, proposed by the Labor Department, which oversees retirement accounts, are part of the Obama administration’s declared mission to support the middle class. The proposed rules would eliminate some of the loopholes that allow brokers to avoid acting as fiduciaries when providing advice on retirement money held inside accounts like 401(k)’s and in individual retirement accounts, which hold roughly $7 trillion, as estimated by the Federal Reserve. More in the New York Times here.

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Judge Approves Second Payout to MF Global Creditors

NEW YORK—A judge Wednesday said MF Global Inc. could distribute more than $480 million to unsecured creditors of the collapsed brokerage, bringing their recoveries to about 74% of what they are owed. “The results to date in these cases have certainly surprised me,” Judge Martin Glenn of U.S. Bankruptcy Court in Manhattan said. “Enormous progress has been made.” Creditors should begin receiving the money 14 days after the judge signs the order. These creditors will have received nearly $1 billion after the payout, an outcome many considered unthinkable when the brokerage’s parent imploded into bankruptcy in the fall of 2011. More in the Wall Street Journal here.

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SEC panel to call for better Wall Street disciplinary database

A panel of investor advocates said on Thursday they were developing a proposal for U.S. securities regulators that will make it easier for retail investors to conduct online background checks of financial professionals before hiring them. The Securities and Exchange Commission’s Investor Advisory Committee discussed the recommendation amid concerns about elderly investors who are often prime targets for fraudsters. It plans to vote on its recommendation in July. More on Reuters here.

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SEC’s Head of Compliance, Andrew Bowden, to Leave

WASHINGTON—A top Securities and Exchange Commission official who made headlines for criticizing the private-equity industry last year is planning to leave the commission. The SEC announced Tuesday that Andrew Bowden will step down from his post as head of the SEC’s Office of Compliance, Inspections and Examinations at the end of April, to return to the private sector. More in the Wall Street Journal here.

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Victims of Financial Wrongdoing Need a More Muscular S.E.C

Given the many billions of dollars financial companies have paid in regulatory and legal settlements related to the mortgage crisis, how much money has actually found its way into the pockets of investors harmed by their actions? Less than you may think. To start with, little of the cash generated in most of the Justice Department settlements went to investors. Much of this money went into Treasury coffers or to various states while troubled borrowers were promised loan modifications and other relief as part of the deals. More in the New York Times here.

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SEC finds that KBR confidentiality agreements ‘stifled’ whistleblowers

In what is being called a landmark ruling for whistleblowers, the Securities and Exchange Commission announced Wednesday that one of the nation’s largest government contractors used confidentiality agreements that had the potential to intimidate and “muzzle” workers from reporting allegations of fraud. The ruling involving Kellogg Brown & Root, also known as KBR, sends a powerful signal to corporations that the improper use of confidentiality agreements will result in civil fines and possible criminal penalties, according to legal experts. The announcement is being hailed as a major victory for whistleblowers, shielding them from signing overly restrictive confidentiality agreements that threaten them with lawsuits and termination for reporting allegations of fraud. More in the Washington Post here.

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U.S. not liable for alleged SEC negligence in Stanford fraud – court

A federal appeals court said on Monday the United States is not liable to victims of Allen Stanford’s fraud who claimed that the Securities and Exchange Commission was incompetent for having taken too long to uncover the swindler’s $7.2 billion Ponzi scheme. A panel of the 11th U.S. Circuit Court of Appeals in Miami said the government is entitled to sovereign immunity. More on Reuters here.

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SEC to take baby steps with vote on ‘IPO Lite’ crowfunding idea

Nearly three years after Congress promised to open a spigot of new financing to startups, securities regulators are finally ready to allow one of two anticipated new fundraising methods to go live. In a meeting Wednesday, the Securities and Exchange Commission will vote on rules detailing what’s being called “Regulation A+,” a new equity selling path that’s been widely described as an ” IPO Lite.” Details aren’t yet certain pending the vote, but observers expect the rules to allow young companies a way to raise $50 million from regular people — and to allow those stakes to be traded freely — without having to navigate the patchwork of state securities laws or formally registering with the SEC. This is separate from the more revolutionary Title III of the JOBS Act, a section that would allow startups at all ages to advertise equity investment deals of almost any size. More in New York Business Journal here.

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