http://fprison.wordpress.com

This is called “justice” in America.

I hope you’re right. The only thing that concerns me is if the those awaiting reimbursement are dependent on SIPC funds that are increased by increased membership dues, it may be a while for those funds to be high enough to cover everyone. It would take years for that happen and Madoff victims are demanding that payments come faster than that. We’ll see.

Thank you for opening the line of communications with me.
I will send you some information within the next day or two.

I appreciate the value and quality of discussion on this site and look forward to sharing our thoughts as well.

RS

Having said that, i must correct your last sentiment. If SIPC runs out of money it won’t be the tax-payer who has to pay the bill, it will be the brokerage firms. In fact, if i remember correctly, the SIPC has already taken the first step and changed the fee structure for the Brokerage firms from $150 per year to a small percentage of their gross. I can check my facts on this but it’s definitely a percentage of their actual trading activity. Therefore, in future years, the SIPC will be super-well funded and there will never be this question again. In the meantime, i’m sure that if the SIPC needs money on the interim, it will be structured as a loan from the government with virtually no possibility for the SIPC to default. Do you realize how many brokerage firms are out there and how much the transact? The SIPC will soon be the richest agency out there! If they’d thought of this sooner rather than only charge Goldman Sachs, JP Morgan and the rest of them $150 a year to be able to put SIPC on their propaganda materials, we wouldn’t even be discussing this because the SIPC would have tens of billions to work with and why shouldn’t they? There is much more fraud out there yet to be discovered, this is only the tip of the iceberg!

Thanks for writing. I empathize with everybody involved directly or indirectly in this tragic situation.

I welcome the opportunity to raise the level of debate and dialogue on these issues.

Please write to me at senseoncents@aol.com with your info so we can coordinate.

LD

The Madoff victims that were direct investors have a good shot of winning their net equity argument with SIPC; however, there will be sacrifice on their part. That sacrifice will be in the form of non-reimbursement to feeder fund investors and, possibly, wider reaching clawbacks.

First, let’s be fair: SIPC do say in their brochure that they insure “money, stocks and other securities are stolen by a broker”. Also, the New Times Securities case may help the victim’s as far as precedent for full SIPC reimbursement goes (Madoff Help has a pretty good basic definition of that case here). And yes, the SEC did screw up.

But on the other hand, SIPC also says that clawbacks are OK and this is also backed by a legal precedent set by the Bayou case (that can be reviewed here.) Furthermore, SIPC/SIPA laws clearly state that individual investors in feeder funds don’t qualify for a SIPC reimbursement.

Both of these sides will go against each other in some judicial setting. Whoever presents the best argument wins. If the victims side wins and a judgment is made that they should get a SIPC check based on what their final statements say, they will have to realize that there is not enough money in the various SIPC funds to fully reimburse them. The only way that I can see them getting a full reimbursement is if taxpayers cover the loss. And after a year of TARP, Wall Street bailouts and widespread unemployment, it will be very hard for taxpayers to accept that they are covering security losses based on securities that were non-existent. Because of that, I think that taxpayers will insist that the clawbacks be wider than they already are.

As a former Madoff investor, I have been involved in working with other investors in an effort to find the justice that we are legally entitled to. We have come together and united as a group. We have overcome the initial shock of losing our financial security and have organized our efforts. We have educated ourselves and want to educate the public.

To that extent, we are working with our elected officials in the Congress and Senate to ensure that the laws, as currently exist, are followed. However, we are not seeing that happening, specifically in regard to the SIPC trustee’s actions.

Not only do we feel his actions are illegal, we fear that his actions send a strong message to every American investor saying that they are not covered by the SIPC protection. Needless to say, this will have a monumental effect on our financial system.

You say that blogs are powerful and are making a real impact. I’m wondering if you’d be willing to help us warn other American investors of the potential danger they are facing as a result of how SIPC is handling the Madoff (and Stanford) investors.

Thank you for your consideration.

Ronnie Sue Ambrosino
Coordinator,
BernardMadoffVictims.org Coalition

I stand with you. Our country and our future needs true transparency, accountability, and integrity. For those reasons and more, I decided to launch this site and utilize my Wall Street experience to help people more fully understand financial and economic issues.

I am glad that our paths crossed. I hope you will revisit Sense on Cents regularly and share your thoughts and opinions. Information and publicity are critical to promoting good corporate governance.

I do know that blogs have become very powerful and are making a real impact. That said, blogs are only as good as the information and insights provided.

Stay the course.