In this regard, how did the case come to be assigned to Lifland? Was it a result of some completely random assignment process (of the kind used by District Courts)? Or, as Chief Judge of the Bankruptcy Court, did Lifland -- as we occasionally hear of in District Courts (with accompanying complaints) -- insist on taking the case himself? The answers to the question of how the case came to be assigned to him could be quite important.
4. In explaining why innocent investors are not usually the subject of avoidance in a SIPA case, SIPC -- as it has done since the beginning -- uses numerical examples carefully crafted to provide the answers it wants, while ignoring that the answers would be different if you use different numbers. This constitutes a form of lying with figures.
Moreover, SIPC's examples depend upon (i) there being enough customer property for everyone to be paid off without an avoidance action (a situation which Lifland told me at the oral argument is not germane to whether there should be a stay of proceedings against small innocent victims -- can you believe that?), and (ii) ignoring that its examples work only because it habitually turns down most claims -- about 90 percent of them, perhaps? If it didn't turn down most claims, there is no way, I believe, that it would have enough money to pay back all claims without avoidance actions. This is another example of SIPC failing to tell the real truth.
In this regard, SIPC should be asked to state what percentage of claims it has turned down over the years and what percentage it has granted.
5. SIPC's explanation of the logic behind its claim that investors have unsecured creditors' claims for fraud against the general estate is on pages 5-6.
6. On page 5 SIPC says if the Trustee is left "unfettered, he will be in the best position to help all of the victims." Of course, in the meanwhile, he will be desperately hurting the small now-impoverished so-called "net winners" -- which seems not to bother him at all. And he will be hurting them even though clawbacks from them are not necessary to pay off people.
7. Page 6: The SIPC fund is currently $1.23 billion. That is shockingly low. It shows SIPC has learned nothing and is still not listening to Congress. It also shows that the strategy is to pay victims (if at all) with money from other victims.
8. Pages 7-8: Their explanations of why so much time was needed to calculate accounts does not mention that this, as oft remarked, was due to the fact that they used CICO rather than the FSM. In any but the simplest, smallest case CICO will require extensive time, thus frustrating Congress' desire for prompt payments to victims. CICO is, in other words, a built in frustrater of Congressional intent. This is a powerful reason, I think, why CICO is inherently improper under SIPA.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
