Seeking a relatively quick victory to aid victims, and foregoing even requests for discovery in search of a quick victory, our side has now, in the absence of crucial facts which discovery could have unearthed, suffered an initial defeat, one based in part on the absence of evidence on crucial facts and on Lifland's desire, in the absence of the evidence, to accept claims made by SIPC and the Trustee that may very well be untrue. Of course, perhaps none of this would have been changed had requests for discovery been made, since Lifland might have denied them. But it would have been harder for him to do so if discovery requests had been made not just by some small fry, to-Lifland-unknown lawyer from northern Massachusetts/Southern New Hampshire, but by a large number of New York City firms including several prominent Wall Street outfits.
And consider the crucial facts which could be very helpful to our side but which we don't know because of the absence of discovery -- crucial facts, moreover, as to which Lifland, when he dealt with the matters at all, could and readily did accept the other side's unproven, unsupported word for things. There is, as said, no factual proof, developed through discovery, that cash-in/cash-out has almost never been used by SIPC, and was used here, despite its destruction of Congressional intent, solely because SIPC (i) was terrified early-on about the potential amount of money it might owe under the final statement method, (ii) feared bankruptcy if the normal final statement method were used (as it has been in a currently unknown number of other Ponzi cases, such as part of New Times and who knows how many other Ponzi cases or other cases where brokers went bust because of theft and securities were missing), and (iii) feared management would lose its very lucrative jobs.
There is also no factual proof, obtained through discovery or otherwise, that now, having eliminated a host of claims, SIPC and the Trustee know, as many of us believe, that SIPC's fund, and the lines of credit to which it has access or can readily gain access, are sufficient (or nearly so) to cover SIPC advances to all direct investors who have a positive net equity under the final statement method.
There is here no evidence on what SIPC was told by alleged actuarial experts around 2003 about the sufficiency of its fund, or about why it did not seek to build up the fund to more appropriate amounts instead of giving Wall Street a pass by charging only $150 per year in premiums to gigantic houses that were doing tens, scores, or even hundreds(?) of billions of dollars worth of business each year.
There is here no evidence of what the monetary effect on victims would be of the SEC's suggestion that the time value of money be considered when determining net equity.
There is here no evidence of what the numerical monetary effects of clawback will be if the final statement method is used or if the cash-in/cash-out method is used.
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