David Iselin’s experience as an investor with, and later as a victim of, Bernard Madoff’s massive financial fraud can be summed up in a few words: nothing is as it seems. Prior to Madoff’s arrest in December 2008 the phrase made perfect sense. It is, after all, a con man’s job to create illusions. For over two decades, Madoff was a master at creating illusions. More on Fox Business here.
It’s been almost three years since NBC News reported the Port Washington, NY meeting of 150 of Madoff’s Long Island and most vocal victims, was held to bring attention to a critical deadline for victims to claim their losses. July 2, 2009 marked the end of a 6 month narrow window for the sea of Madoff victims to claim the estimated $65 billion in fraud related losses to the regulatory agency, Securities Investor Protection Corporation (SIPC). SIPC is the administration overseeing those claims under the supervision of the appointed Trustee Irving H Picard, whose legal embattlement in attempts to recover losses related to the largest ever securities fraud enterprise in US history has been widely publicized. Read more on Examiner.com here.
The Securities Investor Protection Corp., or SIPC, would have brokerage customers believe that they are protected from securities theft and fraud. The SIPC logo, always posted on brokerage walls and stamped on brokerage statements, is supposed to be a reassuring reminder to customers that they are covered in the event of brokerage theft. But SIPC’s history and recent behavior suggests that SIPC isn’t particularly concerned about investors. If brokerage customers think they are covered, they are sadly mistaken.
Read Ron Stein’s MarketWatch commentary here.
Ron Stein, who heads an advocacy group that opposes Mr. Picard’s formula, is placing hope in Congress. Last February, Representative Scott Garrett, Republican of New Jersey, introduced a bill that would require a trustee in a brokerage-firm bankruptcy to accept claims from innocent investors based on their final account statements, not on the net cash they lost. That bill would also bar a trustee from suing to recover fictional profits from those investors even if the brokerage firm’s bankruptcy was a result of a Ponzi scheme, where the “profits” were actually the cash the con artist stole from someone else. Read New York Times report here.
Victims of Bernard Madoff’s Ponzi scheme have reacted angrily to the Securities and Exchange Commission’s decision not to fire any employee over the agency’s failure to stop the massive fraud. “That Mary Schapiro would have a greater sense of obligation to the personnel in her agency than the investors in this country she is charged to protect is beyond my understanding,” Ron Stein, president of an advocacy and support group for Madoff victims, said in a statement. Read more in the Washington Post here.
It is the trustee who is perverting investor protection law by suing thousands of innocent investors, Ron Stein, president of the group, said in an e-mailed statement. “It is absurd that the trustee is complaining about the targets of his lawsuits exercising their right to defend themselves,” he said. “And it should be noted that despite his ‘three years of hard work,’ he has barely begun to return lost money to these innocent investors — not exactly a swift return of funds that investor protection laws clearly require.” Read Bloomberg Businessweek report here.
The liquidator of Bernard Madoff’s firm said people and companies he has sued in 247 actions are “eviscerating” the bankruptcy court and “perverting” the law by rushing to find new judges for their cases. They seek an “escape hatch” from bankruptcy court, which Congress intended to handle such cases as clawbacks of money withdrawn from a Ponzi scheme, the trustee said yesterday. Read Bloomberg Businessweek report here.
Rep. Scott Garrett, R-N.J., chairman of the House Financial Services Capital Markets Subcommittee, told Securities and Exchange Commission Chairman Mary Schapiro in a letter on Monday to wait on final action in reconsidering the SEC’s position on “net equity” in the Bernie Madoff case. Garrett wants to hold off until after the Government Accountability Office publishes its report evaluating the actions of the Securities Investor Protection Corp. and its trustee. Read AdvisorOne article here.
A top House Republican is urging the Securities and Exchange Commission to wait for a congressional watchdog report before reconsidering its position on the method to calculate claims for victims of Bernard Madoff’s Ponzi scheme. Rep. Scott Garrett (R., N.J.) said that before reconsidering the issue, the SEC ought to wait until the Government Accountability Office completes a review of the Securities Investor Protection Corp.—a compensation body overseen by the SEC—and the actions of Irving Picard, the trustee for the liquidation of the Madoff firm. Read more in the Wall Street Journal here.