A federal judge has appointed a trustee to liquidate Bernard L. Madoff Investment Securtites under the auspices of the Securities Investor Protection Corp. (SIPC).
SIPC went to court earlier today to seek liquidation. Irving H. Picard will serve as trustee. The law firm of Baker & Hostetler will serve as counsel to Picard.
“I will work with SIPC to do what the law allows to ameliorate losses to customers,” Picard said.
It will not be an easy job because insurance likely won’t put a dent in the staggering losses, which may total $50 billion or more.
Stephen Harbeck, president and chief executive officer of SIPC, said Picard was the person for the job, but cautioned that the scope of the misappropriation and the state of Madoff’s records will make the task harder than most prior brokerage-firm insolvencies.
“It is unlikely that SIPC and [Picard] will be able to transfer the customer accounts of the firm to a solvent brokerage firm,” Harbeck said.
The state of the firm’s records “may preclude a transfer of customer accounts,” SIPC added in a News Release. “Also, because the size of the misappropriation has not yet been established, it is impossible to determine each customer’s pro rata share of ‘customer property.'”
SIPC insures accounts up to $500,000 per customer. The insurance covers only money missing from brokerage accounts. It does not insure against investment losses.
Learn more about SIPC.