PRESSROOM:
I wish to again thank folks for the effort in getting out letters of support of this important Perlmutter-Ackerman legislation, HR 5032, “The Ponzi Victims Bill of Rights of 2010.” We now have 19 cosponsors to the bill.
As many of you know, NIAP has taken a position in support of this legislation, despite its flaws, which include the omission of a final account statement definition of net equity and inconsistencies regarding language for indirects. Despite these imperfections, it’s a remarkable step forward in that it provides a clarification preventing clawback of innocent investors and it attempts to provide, for the first time, SIPC relief for indirect investors. Let me be clear – NIAP would not be satisfied with passage of the bill as it’s written. However, this bill is intended to spur hearings and information gathering, expected this summer, which combined with our extensive lobbying efforts, will enable us to pursue necessary modifications.
As you know from our prior updates, the final account statement definition of net equity (FAS-NE) remains a key goal, and we are working aggressively to that end. Essential to this is determining the “cost” for this modification – the “scoring” issue – which is the primary reason FAS-NE was excluded from the legislation (ironically, FAS-NE was expressly included in the language for indirect investors, as the cost to the SIPC fund is expected to be less). We are now working with Chairman Kanjorski’s staff to obtain the necessary information from the Trustee and SIPC to help accurately assess the “scoring”. Again, according to Ackerman’s key staff, Cong. Ackerman and Cong. Perlmutter did not want to hold up the legislation for anti-clawback and assistance for indirect investors while trying to estimate the potential costs, but do profess to support an FAS definition.
I understand that it is difficult for many to embrace the legislation as written and encourage congressional leaders to support something that falls short of what we are looking for. It is important to realize that we are working with a top lobby firm – the Smith Free Group — a highly regarded and reputable firm that strongly shares our goals and commitment. They have deep and powerful connections on both sides of the political isle, and many years of experience. They have made it clear to us that the best path to getting our net equity definition and other flaws in this legislation resolved is getting congressional engagement and sponsorship at this time, holding extensive meetings, holding hearings, information gathering from the Trustee and SIPC, and working to make the necessary changes to the legislation. As emphasized by Andy Barbour of the Smith Free Group, to undermine the process at this point will only kill the bill as Congress would be all too happy to allow it just disappear off the radar. If, near the end of the day, this legislation is inadequate or contrary to our goals, we can decide collectively how to proceed as we would still have considerable influence regarding its passage or not.
What you can do to help out
We continue to need letters written targeting Congress members who are not current sponsors. While victims tend to live in areas represented by members currently in support or sponsoring the legislation, it’s important that we get friends and relatives living in different areas – in the South, Midwest, Southwest, etc – to also encourage support. We also seek volunteers who can help us build up our grassroots infrastructure by reaching out to fellow victims and helping us expand our campaign. Again, this is about protection for ALL investors. What happened to Madoff victims could happen to anyone! [Please click here for more information on how to volunteer and help.] The Stanford victims, frankly, are running rings around us in terms of development of grassroots infrastructure! We must do much better here. Everyone needs to step up.
We also need to identify “grass tops” – individuals who have close connections to key Congressional members in the House or Senate. These may not be victims, but rather folks who are influential, sympathetic to our cause, and willing to put a word in on your behalf. If you know of someone, please contact us at (631) 425-0770 to discuss the next step on this.
As you communicate with your elected officials, please do not hestitate to advocate for a FAS definition of net equity. Just try to be sure that your tone and prose are appropriately respectful.
The legislative/lobby approach we’re taking:
1. At NIAP’s request, Congressman Kanjorski – Chairman of the Financial Services Subcommittee on Capital Markets – is demanding from SIPC and the Trustee the key information needed to assess FAS-NE on the SIPC fund and Treasury. If SIPC declines, this information can be subpoenaed. House Financial Services Chairman Barney Frank is also on board with this. This information will lead to hearings, ideally in July, that will allow modifications to be made and require the obtaining of key information.
2. We (SFG, NIAP) continue to meet with Congressmen in DC and directly plead the case regarding FAS-NE and flaws in the legislation. In addition to the many meetings being undertaken by SFG, we will be asking victims to accompany us to DC in July to make the rounds on Capitol Hill.
3. We are advocating generally for indirect investors. Indirect investors are fortunate to have an outstanding and pragmatic Congressman on their side – Ed Perlmutter (D-CO) – and must work closely with him to press on some of the issues specific to indirects.
4. While we’re working on this immediate legislation, we’re also looking to set the table for comprehensive SIPC and investor protection overhaul.
5. We are also working hard to build support in the Senate for parallel SIPC legislation. It’s important to keep in mind that we are also working aggressively in the House (H.R.5058) and Senate (S.3166) to move forward enhanced tax relief that will benefit both direct and indirect investors equally.
Grass roots support/back up plan:
1. We are mobilizing via our current grass roots letter writing efforts, encouraging support for the Perlmutter-Ackerman bill but also encouraging support for a FAS-NE definition (and also fixing some of the flaws in the legislation). We will need a broad base of Congressional support nationally, which is why it will be critically important to have friends and family in areas other than the northeast and southeast write letters demanding Congressional support. All but few sponsors are currently in the major east coast impact areas. This must be expanded.
2. We are preparing to wage a strong FAS-NE standalone effort targeted to key Congressional members if we do not pick up strong support.
3. We are prepared to unleash a PR campaign targeted to the Beltway, to help force support of FAS-NE.
4. We will take whatever PR & grassroots efforts necessary to try to lift FAS-NE to success.
5. We are building coalitions with others who may be able to assist to gaining support for this.
I ask all to please step up and help. Again, this process will take several months, but our efforts to get Congress engaged now is of the essence. According to the SFG, this will probably be a stand-alone piece of legislation, but the timetable remains too early to project. In the interim, we will continue to build support and momentum for the Perlmutter-Ackerman bill and use it as the leverage point to bring in the FAS-NE support and make other necessary improvements. We ask you to support these efforts. It may seem like a bit of a leap of faith, and not everyone will buy in, but it is essential that we demonstrate a large degree of coherence and make sure we don’t undermine these efforts at this early, critical stage. We must show Congress how important this is by emphasizing their sponsorship of this bill and then making the necessary modifications to make it work. I ask all to join us in this regard.
In peace,
Ron Stein
President, Network for Investor Action and Protection
