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Sense on Cents Supports HR 757

Posted by Larry Doyle on July 31, 2012 6:05 AM |

Earlier this year I came out in support of HR 757, legislation drafted and proposed by Rep. Scott Garrett (R-NJ), to address the sham perpetrated by the Securities Investor Protection Corporation (SIPC) upon innocent investors. As I wrote in support of HR 757 then,

Why are we discussing SIPC today? Recall that post Bernie Madoff, the SIPC fund was depleted. Recall also that for approximately 13 years those paying into SIPC were charged an annual premium of $150 in order to put the SIPC stamp of protection on their brokerage statements.

Did you just spill your coffee and think I must have mistyped that figure. I didn’t. I highlighted that ridiculous figure in November 2009.

$150 annual premium paid by each and every Wall Street brokerage house to put a stamp of investor protection on their statements. What type of insurance do you purchase for a $150 annual premium? Seriously. 

What do you pay for auto insurance? How about homeowners? Health? A little bit more than $150 perhaps? Just a little? Yet the crowds at Goldman, Morgan Stanley, JP Morgan, Merrill Lynch, Madoff Securities and elsewhere had the gall to enact (remember SIPC is industry funded) and pay a mere $150 for their annual SIPC premium so investors could “believe” they were protected.

HR 757 is legislation addressed to correct the injustice of the sham perpetrated by SIPC and Wall Street for all those years in which they paid that “astronomical” and “excessive” $150 premium.

I welcome supporting and endorsing this legislation and would ask you to do the same. As Representative Garrett wrote earlier this year,

“When investors see the Securities Investor Protection Corporation (SIPC) seal of approval, they should have the utmost confidence in the account statements they receive. I do not believe these ordinary investors, who knew nothing about the fraud being perpetrated by Bernie Madoff, should be held to a higher standard than the federal government. After all, it was the Securities and Exchange Commission (SEC) that missed the Madoff fraud in the first place. Furthermore, the Internal Revenue Service (IRS) was happy to rely on these same statements to collect taxes from the reported profits.

“My bill clarifies that for the purposes of SIPC protection, customers of registered brokers are legally entitled to rely on their customer statements as evidence of what their broker owes them. Indeed, in a world where customers do not hold physical securities, it could not be any other way.

“I introduced this legislation because I am increasingly concerned that the Trustee in the Madoff case is ignoring the law and failing to provide prompt assistance to those who have been thrust into financial chaos. He is taking positions on a wide range of issues that are contrary to SIPA, the Bankruptcy Code, and federal and state laws that are intended to protect investors against bad acts on the part of their brokers.

Now you can help. How so? Call on your congressmen to support HR 757 which is coming up for a vote TOMORROW.

PLEASE reach out TODAY.

I endorse the following message and would ask you to do the same. Think of the sham perpetrated with the $150 premium. Do you need more reason than that to reach out and compel your Congressmen to support this bill? Interested investors recently put forth this message and I welcome sharing it.

Congressman Garrett is putting HR 757 to a vote in the Subcommittee on Capital Markets. This is something we have been working towards for the past three years. If the bill becomes law, every Madoff investor who had an account will get SIPC insurance based on their last statement and there will be no clawback suits against innocent customers.

It is urgent that you contact the members of the Subcommittee on Capital Markets and explain how much you support this bill. The most important members are Posey, Hensarling, Neugebauer, Campbell, Royce and Manzullo. But please contact everyone.

Please note that due to security procedures, mail may take up to three weeks to reach the offices in Washington, D.C. Therefore, please try to email or call the members on the list below to expedite your message. THE VOTE WILL OCCUR ON AUGUST 1ST!

Additionally, please forward this email and attachments to your friends, families and associates so that we may have a stronger voice.

If you’ve already received this request and have written your letters, thank you very much. All I ask now is for you to forward this to everyone on your contact list so that we can be assured of even more support for this important bill.

Thank you.

CONGRESSMAN PHONE #

EMAIL ADDRESS FOR CONGRESSMEN
Ackerman Gary (202) 225-2601jedd.Moskowitz@mail.house.gov
Biggert Judy (202) 225-3515Nicole.Austin@mail.house.gov
Campbell John (202) 225-5611Wes.McClelland@mail.house.gov
Carson André (202) 225-4165Nida.Zaman@mail.house.gov
Dold Robert (202) 225-4835eric.burgeson@mail.house.gov
Donnelly Joe (202) 225-3915Jessica.McEwen@mail.house.gov
Ellison Keith (202) 225-4755kari.moe@mail.house.gov
Fitzpatrick Michael (202) 225-4276Kyle.Whatley@mail.house.gov
Garrett Scott (202) 225-4465amy.smith@mail.house.gov
Green Al (202) 225-7508Gregg.Orton@mail.house.gov
Grimm Michael (202) 225 3371Richard.Hoffmann@mail.house.gov
Hayworth Nan (202) 225-5441jonathan.day@mail.house.gov
Hensarling Jeb (202) 225-3484Kirsten.Mork@mail.house.gov
Himes Jim (202) 225-5541benjamin.turner@mail.house.gov
Hinojosa Ruben (202) 225-2531holly.Bullard@mail.house.gov
Hurt Robert (202) 225-4711bryan.wood@mail.house.gov
King Pete (202) 225-7896Adam.Paulson@mail.house.gov
Lucas Frank (202) 225-5565Courtney.Box@mail.house.gov
Lynch Stephen (202) 225-8273Cara.Camacho@mail.house.gov
Maloney Carolyn (202) 225-7944Kristin.Richardson@mail.house.gov
Manzullo Donald (202) 225-5676Kelli.Nelson@mail.house.gov
McCarthy Kevin (202) 225-2915Kyle.Lombardi@mail.house.gov
McCotter Thaddeus (202) 225-8171Artur.Suchorzewski@mail.house.gov
Miller Brad (202) 225-3032Corey.Frayer@mail.house.gov
Moore Gwen (202) 225-4572Andrew.Stevens@mail.house.gov
Neugebauer Randy (202) 225-4005daniel.Hilton@mail.house.gov
Pearce Steve (202) 225-2365Kate.Schmucker@mail.house.gov
Perlmutter Ed (202) 225-2645Amanda.Slater@mail.house.gov
Peters Gary (202) 225-5802Jonathan.Smith@mail.house.gov
Posey Bill (202) 225-3671Nicole.McCleary@mail.house.gov
Royce Ed (202) 225-4111Michael.Ahern@mail.house.gov
Schweikert David (202) 225-2190Matthew.Tully@mail.house.gov
Sherman Brad (202) 225-5911Tim.carey@mail.house.gov
Stivers Steve (202) 225-2015Jesse.walls@mail.house.gov
Waters Maxine (202) 225-2201Charla.Ouertatani@mail.house.gov

Are you still scratching your head thinking about that $150 SIPC premium paid for those 13 years? Investor protection? Really? Please make the call or write to your Congressmen …today. Thank you.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Ronnie Sue

    Larry, once again you hit the nail on the head.

    Thank you

  • Peter S.

    Done.

  • Ron Larson

    Interesting…
    I went to the SPIC website. They only cover up to $500k per person. Seeing has how the average 401K needs to be $1.5 to $2.0 million in order to fund a retirement, that means for a lot of people, their retirement investments are mostly exposed.

    They don’t cover fraudulent securities. So if your brokerage was telling you that you owned a stock, but you really didn’t because they gave your money to their mistress, then you are SOL.

    The fact that SIPA is off the hook if there were no real securities involved gives them a huge incentive NOT to audit their covered firms. Heck, they probably hope upon high that the firms are selling fake securities. They get to collect premiums with no chance of paying a claim.

    I guess you get what you pay for. Nothing.

  • LD

    You got it.

    Individual investors had better be VERY careful as to whom they do business and should check to make sure their assets are held by a separate custodian.

    This all falls under the heading of “counterparty credit risk.”

  • Allen S.

    Hi Larry,

    HR 757, hurts 95% of the madoff investors, who were indirect and are not afforded any SIPC insurance.

    It rewards the net winners, those who withdrew “other peoples money” at the expense of the net losers.It provides the net winners with 500K SIPC coverage plus a share of any additional recovered funds by the trustee, as equals with the net losers, plus being shielded from any potential claw backs.

    It does great harm to all those who lost the most money, while rewarding the ones who made out well and did not lose any of their money at all, only fictitious profits.

    As the Supreme Court said, against the Chaitman lawsuit,where it would make Madoff in charge of who would get what because it would be based upon his erroneous statements.

    • Marge

      We are net winner loosers. we didn’t take other people
      ‘s money. Our money was making money. Just ask the
      people in the stock market if Bernie wasn’t trading &
      making money. He was making lots of it according to
      the SEC. Your money in the bank pays interest, yes?
      Are you taking other people’s money? Are you covered
      by FDIC up to $250,000? We were supposed to be cov-
      ered by SIPC up to $500,000. What a lie we were fed.

    • DFT

      no my friend, the winner is the IRS. Most people withdrew funds from Madoff to pay taxes only and after many years, the tax money amounted to more than the principal….government got ALL that money except for the 5 years allowed for refiling the taxes. what say ye now?? can’t understand why more people are not screaming about this. do the math!!!

  • Ron Stein

    Hi Larry –

    I haven’t had an opportunity to speak with you, but I do want you to know that I, and our many members appreciate the consistent support you have given for legislation that would enhance protection for investors.

    It is particularly satisfying to see a fellow member of the financial community not only sensitive to the needs of and challenges forf investors, but someone capable of pursuing and effectively communicating to others. I find your blogs and articles well written, accurate, and impactful.

    As you may know, the markup of this bill – which we worked closely with Chairman Garrett’s office to create — has been postponed. There are several reasons why, which I can elaborate on further another time.

    What is more important is that this bill, or some version of it will be reintroduced early in the next session, less constrained by a tiny time frame to work within, and giving us ample time to develop the broad support needed to provide for smoother sailing and a greater chance of passage in Congress.

    So on behalf of our over 1200 members – most of them Madoff victims — and investors everywhere, I say “thank you”, and please continue the very fine work.

    Ron Stein
    President
    Network for Investor Action and Protection






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