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Madoff Investors Suing SIPC

Posted by Larry Doyle on February 24, 2010 2:39 PM |

You can rest assured that the powers that be on Wall Street would just as soon have the Madoff saga over. The Madoff scam perpetrated on investors is an ugly reminder of the non-existent financial regulatory system during the better part of the last twenty years.

I also believe many in Washington also might like to see the Madoff saga quietly pass by. The failures of the SEC, FINRA, and SIPC in this greatest of scams are an ugly reminder of the Wall Street-Washington incest.

Well, while many of the incestuous partners would like to turn the page, there remains a lot of filth that still needs to be cleaned up and a lot of individuals and institutions that need to be held to account.

To that end, I commend the Madoff investors and I stand by them as they announce a suit tomorrow against the directors of the Securities Investor Protection Corporation (SIPC).

America should not allow itself to be fatigued by the fight for justice and fairness in this Madoff scam. The endless pursuit for real transparency and integrity does not measure itself by a calendar but rather by results.

The fight continues.

MADOFF VICTIMS TO ANNOUNCE LAWSUIT ALLEGING FRAUD AGAINST DIRECTORS OF SECURITIES INVESTOR PROTECTION CORPORATION

Suit charges SIPC fraudulently induced Madoff investors to believe they had up to $500,000 insurance coverage on securities and seeks compensatory and punitive damages

New York, NY –Bernie Madoff investors on Thursday will announce a lawsuit against the directors and key officers of the Securities Investor Protection Corporation (SIPC) for what they allege is a massive investment insurance scam.

Madoff victims and their attorney will gather on the steps of Federal Hall in Lower Manhattan, opposite the New York Stock Exchange, to announce the legal action and call for Congressional reform of the quasi-governmental SIPC agency.

The class action lawsuit, to be filed in New Jersey federal court, accuses the SPIC directors of orchestrating a scheme to fraudulently induce thousands of Madoff victims to invest in a SIPC-insured broker with the deliberate intention of denying SIPC insurance in the event of a loss. The plaintiffs claim that the defendants are personally liable for the damages the plaintiffs and others similarly situated have suffered.

The financial industry which is Wall Street has utilized the cover of SIPC protection to promote its business. As such Wall Street needs to be held accountable.

Wall Street paid out approximately $140 billion in bonuses in 2009. Bonuses should only have been paid after firms involved in the fraudulent distribution of auction-rate securities made investors whole and after Madoff investors received their SIPC payouts.

LD

  • Matt

    AMEN Larry! Couldn’t agree with you more.

  • disenchanted

    I can’t pass an opinion on whether SIPC did
    not come through for the investors, but I
    can tell you that SIPC obviously ran out of
    funds. BD’s that had no affiliation with
    Madoff or any of his customers are paying the
    price. Many of us are now paying tens of
    thousands of dollars a year as our assessment.
    Last year we paid $ 150.00.

    • Always Learning

      Well, $150/year sounds incredibly low. There should obviously be some sort of scale for premiums. I’m not saying that tens of thousands for a small company is appropriate, but $150/year is a joke. What is even more of a joke is that a place like Goldman only paid $150/year.

  • disenchanted

    The assesment was cut many years ago to
    a straight $150.00 because SIPC had stated
    that it was way over funded. Prior to that
    we were paying a hefty assessment. It took
    one incident, Madoff, to empty the bucket.

    • LD

      Disenchanted,

      The point here is that the industry may have thought it was overfunded but in fact it wasn’t.

      Having Goldman Sachs, JP Morgan et al pay $150 annual premiums for 13 years is truly an abomination.

      I should be more specific, when I refer to Wall Street or the industry, I am accustomed to thinking of it from the standpoint of the large Wall Street firms. I appreciate your questions and concerns given your connection to smaller broker dealers.

  • disenchanted

    Everyone seems to be missing my point. It is
    not the SIPC fund per say, I am alluding to,
    it is that such an egregious fraud was able
    to be perpetrated, and now we are all paying
    the price. Few samll firms sold ARS,and was not the cause of the bubble breaking. When Finra audits us they
    leave no stone unturned. It is immpossible
    that they could have missed him if he got
    the same treatment we do.

  • richard friedman

    I understand the perspective as expressed by the brokers. The investors, as usual, don’t seem to matter. SIPC, for many reasons has become a scam. Millions of investors covered by a mere $150 per broker for 19 years for up to $500,000 in protection that does not exist when an “event” happens! And none of the brokers thought there was anything wrong with that? Once again the investor has lost confidence in Wall Street and Wall Street wonders why.






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