SIPC: $5.44 BILLION NOW DISTRIBUTED TO MADOFF VICTIMS

Madoff Trustee’s Third Distribution Sends Approximately $506.2 Million to Customers With Allowed Claims

WASHINGTON, DC – April 1, 2013 - With the distribution of approximately $506.2 million to victims in the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS), a total of $5.44 billion will now have been distributed to BLMIS customers with allowed claims.   The Securities Investor Protection Corporation (SIPC) today applauded the hard work of Trustee Irving H. Picard and his attorneys in their continued efforts to recover and return funds to BLMIS customers.

When combined with the funds already returned to BLMIS customers from the Customer Fund and advances from SIPC, more than 50 percent of the total Madoff accounts with allowed claims will be fully satisfied following the third interim pro rata distribution. A total of 1,106 accounts will be fully satisfied following the third interim distribution out of a total of 2,178 accounts with allowed claims. 

Since December 2008, $9.32 billion has either been recovered or agreements reached to recover funds to return to BLMIS customers.  This amount is more than 53 percent of the approximately $17.5 billion in principal estimated to have been lost by BLMIS customers who filed allowed claims. The Trustee’s recovery of more than $9.32 billion has been made possible through advances provided by SIPC, which is funded by the securities industry.  To date, SIPC has committed approximately $807 million to pay customer claims and over $718 million to fund the liquidation proceeding.  No monies recovered by the Trustee have been used to pay any administrative expenses.  All recoveries made by the Trustee benefit customers. 

SIPC President Stephen Harbeck said: “Thanks to the significant Tremont Funds settlement, which allocated more than $1 billion to the BLMIS Customer Fund, and additional funds recovered by Trustee Picard and his team since last fall, additional distributions continue to be made in an effort to fully satisfy as many BLMIS allowed claims as possible. We applaud the hard work Trustee Picard has undertaken to recover monies and distribute them to customers at the failed BLMIS brokerage.  His successful efforts have resulted in the ability to fully satisfy more than half of the BLMIS accounts with allowed claims, a significant achievement.  SIPC is pleased to continue to facilitate the work of the Trustee to make possible the maximum recovery and return of funds to customers. ”

ABOUT SIPC

The Securities Investor Protection Corporation is the U.S. investor's first line of defense in the event of the failure of a brokerage firm owing customers cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds.

The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities - such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims for customer cash and/or securities held in custody with the broker for up to a maximum of $500,000 per customer. This figure includes a maximum of $250,000 on claims for cash. From the time Congress created it in 1970 through December 2011, SIPC has advanced $ 1.8 billion in order to make possible the recovery of $ 117.5 billion in assets for an estimated 767,000 investors.

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

SEC, SIPC to argue in court over Stanford claims

Securities regulators are due in court on Tuesday to argue that a brokerage industry-backed protection fund should let thousands of victims of Allen Stanford's alleged Ponzi scheme file claims for compensation.
The Securities Investor Protection Corp, which has handled liquidation proceedings for Bernard Madoff's Ponzi scheme and the MF Global failure, has said the 40-year-old Securities Investor Protection law does not apply in the Stanford case.
The unprecedented legal face-off between SIPC and the U.S. Securities and Exchange Commission could have far-reaching consequences for how investors are compensated if their brokerage firm fails.
Stanford, 61, was arrested in 2009 over charges that he ran a $7.2 billion Ponzi scheme linked to certificates of deposit issued by his Antigua-based bank.
Tuesday's hearing in the U.S. District Court for the District of Columbia will come just a day after Stanford's criminal trial gets under way in another federal court in Texas.
The SEC asked the District of Columbia court in December to uphold its authority to order SIPC to help Stanford's victims after negotiations between the two entities had failed. It is unclear how soon Judge Robert Wilkins could rule.
SIPC is standing by its decision not to intervene on behalf of Stanford investors and has created a website to explain its position at http://www.stanford-antigua-sec-lawsuit.com/
It argues that it is limited by law to protecting customers against the loss of missing cash or securities in the custody of failing or insolvent SIPC-member brokerage firms.
While Stanford's Texas-based brokerage was a SIPC member, its offshore bank was not. And in any case, SIPC says it was not chartered by Congress to combat fraud or guarantee an investment's value.
"I think as a general policy matter, SIPC probably should win," said Seton Hall University School of Law professor Stephen Lubben. "If they don't, we are turning this insurance fund... into basically fraud protection across the board in all kinds of investments, which is going to be a lot more expensive."
Initially, some staff at the SEC seemed to agree with SIPC's view.
Former SEC General Counsel David Becker is quoted in a report released in September as saying "the law is the law" and that Stanford victims did not qualify.
Then in June, just one day after Senator David Vitter threatened to block the nominations of two SEC commissioners until the agency made a decision on Stanford claims, it announced that it was siding with the victims.
In a 195-page document, the SEC said that for SIPC to conclude that these customers did not actually deposit cash with Stanford Group "would elevate form over substance by honoring a corporate structure designed by Stanford in order to perpetrate an egregious fraud."
The timing of the SEC's announcement has raised some eyebrows at SIPC.
But Angela Shaw, the founder and director of the Stanford Victims Coalition, said the SEC's decision was not based on politics. It came, she said, after she turned over thousands of documents that helped convince the agency that investor money never went to the bank, but was instead spent by the brokerage.
"We have a broker-dealer that was a SIPC member that stole customers' funds," she said. "SIPC covers theft of investor funds when they are stolen by the broker-dealer, and the SEC has not alleged that this foreign bank stole our money."
TECHNICAL ARGUMENTS
It is not clear whether Tuesday's hearing will explore the merits of the arguments for or against SIPC coverage for Stanford investors.
The SEC, which has oversight authority over SIPC, plans to tell the judge that its position is "not subject to judicial review." It wants the court to simply weigh whether it has met the requirements to compel SIPC to launch a liquidation proceeding.
Stephen Harbeck, president and CEO of SIPC, rejects that argument entirely.
"I think it is fair to say that the SEC's position is as follows: The court may not look at the facts, the court may not look at the law, SIPC may not present any counter-argument, there is no appeal, and the court must do as we say," he said. "I am unaware of any jurisprudence that allows that."

SEC spokesman John Nester said Harbeck "apparently misunderstands our position, which is based on the facts and the law."

Read more: http://sivg.org/forum/view_topic.php?t=eng&id=90

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/