SIPC To Liquidate Bernard L. Madoff Investment Securities

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.

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4 Responses to “SIPC To Liquidate Bernard L. Madoff Investment Securities”

  1. I had 393,000 dollars in victory ira fund through charles schwab. This dissappeared along with arthur nadel. I also had $138,000 with victory fund through my 401k, which was put in by me in april, 2008. That money is also gone with nadels disappearance. I was assured all along by neil and chris moody that everything was good and the funds went into cash every night. QUESTION? DO I HAVE COVERAGE WITH SIPC?

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  2. >> QUESTION? DO I HAVE COVERAGE WITH SIPC?

    Sorry to hear of your troubles. These have been painful, life-altering times for many investors.

    Wish I could give you better guidance than “contact an attorney,” but I believe that’s what you should do.

    Here is an SEC News Release on Nadel:

    http://sec.gov/litigation/litreleases/2009/lr20858.htm

    I did a quick check on the SIPC website — sipc.org — and didn’t find anything immediately on Nadel.

    Perhaps there is something I missed during my quick glance, so it might be a good idea for you to
    visit the SIPC site, as well.

    Take care.

    Patrick

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  3. Hi William,

    My first step would be to read the Eiki on Arthur Nadel. If you are not familiar with Wiki’s, they are repositories of online information which can be updated by anybody. While generally accurate, do not rely on them.

    Here is the Wiki for Arthur Nadel:

    http://en.wikipedia.org/wiki/Arthur_Nadel

    I see that Burton Wiand in Florida has been appointed the receiver and the latest court filing was in the Southern District of New York.

    Personally, if I was in your position I would:

    1. Get all my records together.

    2. Contact a qualified securities attorney for at least a consultation. Reputable attorney’s will often give you a free consultation. If not, I would spend the $250 (or whatever they charge) for a consultation. The point is to get a legal opinion of what my options and chances are.

    3. Contact the receiver as he has been appointed by the court to handle matters in the best interest of the investors.

    4. Contact the court so that it has you listed as a victim.

    As for your SIPC question, you’d have to contact them, as Patrick stated. Charles Schwab is a brokerage. Victory Fund is alleged to be a Ponzi. The SIPC does not insure Ponzi’s, it protects investors in case a legitimate brokerage becomes insolvent. I suspect the question is going to hinge on how did the money get from your pocket and into the Victory Fund…and that’s where you need legal advice from a qualified securities attorney, in my opinion.

    Be aware that follow up scams are common so be very wary of anyone giving advice, including mine.

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  4. William,

    Here is the receiver’s site:

    http://www.nadelreceivership.com/

    And thanks, dirty_bird, for lending William a hand here.

    Patrick

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