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Discursive Comments On The Oral Argument In The Court of Appeals In The Madoff Case On March 3, 2011. Part 5

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-           By protecting small investors, confidence and investment in markets were to be built;

 

-           That the reasonable expectations of investors are to be satisfied;

 

-           That account statements and confirmations are the measure of reasonable expectations and net equity, especially because the change to holding securities in street name left investors no other way to know their holdings;

 

-           That investors are to be paid promptly, which is inherently impossible under CICO because of the need to reconstruct complex accounts over many years;

 

-           That investors are to receive securities where they can be acquired in a fair and orderly market, as can be done here where the securities are S&P 100 stocks that can be acquired in blocs over time.   SIPC ignores this requirement, though it was   a "principal purpose" and "essential feature" of the 1978 amendments;

 

-           That investors are to be protected against theft, which occurred here on a massive scale;

 

-           That SIPA creates an insurance program modeled after the FDIC.   Here counsel for the Trustee has stated that Senators who made this point did not know what they are talking about, saying "They are wrong . . . ."

 

The legislative history comprised of scores of statements on the floor revealing Congressional intent are nowhere cited by the Trustee, SIPC or the SEC.   Yet the statements were by many of the leading Senators and Congressmen of the 1960s through the 1980s:   by two men who ran for President, Senator Muskie and Congressman John Anderson, by legislators prominent with regard to economic, financial and tax matters, such as Senators Cranston, Harrison Williams, and Proximire, and Congressman Rostenkowski, and by other leading legislators such as Senators Hartke and Bennet and Representatives Staggers, Eckhardt, Moss and Boland.   Identical statements were made by President Nixon and Secretary of the Treasury Kennedy.

 

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Lawrence R. Velvel is a cofounder and the Dean of the Massachusetts School of Law, and is the founder of the American College of History and Legal Studies.
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