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WHAT DOES YOUR BROKER STATEMENT REALLY MEAN? MADOFF VICTIMS KNOW: NOT MUCH

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SIPC's interests are aligned with Wall Street and NOT the consumer. It is seeking to protect its members rather than innocent investors. It is time for these issues to be exposed and the truth presented to public. There is no safety net for the American investor. If SIPC is to prevail, no one's investments are safe.

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What does your Broker Statement Really Mean? Madoff Victims Know the Answer: Not much

Imagine yourself with a huge nest egg. You invested money with a well-respected money manager, a registered SEC broker-dealer, and watched your investment grow year after year. You took money out to pay everyday living expenses, taxes, maybe a vacation or two. You got rid of your long term care insurance because, after all, you had enough money to take care of yourself. You feel safe because the SEC has publicly acknowledged your money manager, you know that he was the chairman of an exchange. And, of course, you think, what's the worst that can happen? After all, your money is SIPC insured -" you see the SIPC logo on your statement each month.

Then, one day, you discover that the money manager was a crook and arrested for running the largest Ponzi scheme in US history. You find that the SIPC logo -" a promise of insurance -" is meaningless and, and finally, that SIPC, whose job it is to protect the investor , is demanding that you repay THEM for money you'd taken out in good faith over the years for such things as taxes, education for your kids, and normal living expenses. Something called a "claw back."

That is exactly what happened and is happening to former investors of Bernard L. Madoff Investment Securities. The past two years have been filled of every imaginable emotion , not dissimilar to the Kubler Ross Five Stages of grief: denial, anger, bargaining, depression and acceptance, although I haven't met too many who have reached the final stage. Many are still in deep depressions, having had their dreams stolen, first by Bernie Madoff and now by laws that were put in place to protect investors being used against them. Madoff investors are for the most immigrants themselves, or the children of immigrants -" citizens of the United States who lived the American Dream. They worked hard, raised families, built businesses, and saved. Their only crime, it seems, was trusting -" trusting a man with a stellar CV and trusting that the system that was put in place to protect them would not be turned against them.

In 1970, Congress created the Securities Investment Protection Corporation. SIPC was an outgrowth of the Securities Investor Protection Act, enacted in 1970 and amended in 1978, a law put in place to restore confidence in Wall Street following some high profile broker failures and disastrous backroom troubles. There were several key elements of that bill: first and foremost, Wall Street would no longer have to keep customers' stocks and bonds in the customers' name -" they could be kept in Wall Street's -" or "Street Name". 2 nd -" investors' reasonable expectations are and amounts shown in the statements and confirmations they receive from their brokers. 3rd - to fund this new non-profit, tax exempt corporation known as SIPC, Wall Street would be assessed fees to run the corporation; in other words, the SIPC -" the organization empowered to protect investors -- would not require one tax payer dollar, not one. Wall Street has earned billions as a result of this law.

Truth be told, the SIPC does not exist protect investors. Rather, they have a long and storied history of protecting themselves and their funders - Wall Street. Over a decade ago, Gretchen Morgenson, a Pulitzer Prize winning reporter wrote "Investor Beware: Many Holes Weaken Safety Net for Victims of Failed Brokerages." In that New York Times article, Ms. Morgenson wrote "the organization requires investors to run a gauntlet of legal technicalities that would challenge even those knowledgeable about securities law." She further noted that "the Trustees in these cases have received far more [money] from representing the corporation than the corporation itself has paid to investors. Their critics say that trustees wanting repeat business from the corporation have an incentive to minimize payouts to investors. One trustee is the former president of the corporation.

In the Madoff case, the Trustee is a man named Irving Picard . Mr. Picard, shortly after being appointed by the SIPC (who also pays his fees) joined the white shoe New York law firm of Baker & Hostetler. It should not come as any surprise that Mr. Picard has been the Trustee in 6 other SIPC liquidations prior to the Madoff matter. He says that customers' statements are worthless. He and his firm has billed the SIPC at a rate of $1 million per week and some estimate that total legal fees could exceed $1 billion -" that is money that comes from the general SIPC fund, the same fund that Mary Schapiro, the SEC Chairman said was not solvent enough to pay all claims.

So I ask you, who do the Trustee and the SIPC really work for? If the Trustee is to prevail, we all lose ... your broker statements will be rendered worthless.

http://www.investoraction.org

 

Take action -- click here to contact your local newspaper or congress people:
Broker Statements are a Fraud and Mean Nothing

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www.investoraction.org

I am a career trademark licensing sales professional and recent paralegal, whose career recently took a detour when the Madoff fraud was discovered. Seeing the devastation that this crime -- and subsequent immoral behavior of the agencies empowered (more...)
 
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At a Congressional Hearing in 2009, Mary Schapiro,... by Ronnie Sue Ambrosino on Wednesday, Feb 2, 2011 at 11:09:16 PM