This statement, as indicated, made crucially important points -- points which should have been made early in our argument. Chaitman said that under a specific statutory provision, SIPC cannot change the definition of net equity, a definition of great important to Congress. She said this was so -- at least as I understand the transcript -- because Congress wanted to create confidence in markets -- one of our side's few allusions to all-important Congressional intent -- so that people would agree not to receive physical securities (and would instead agree to a street name system). She said the statute says nothing indicating that it protects only those investors who follow a buy and hold strategy instead of giving their brokers discretionary authority to buy and sell, an authority that so many do give to brokers. And she said the statute covers every Madoff investor who legitimately expected, as all innocent investors did, that they owned the securities shown on their statements.
Chaitman's statement was the end of the oral argument.
* * * * *
Because this essay took a godawful long time to complete, and was therefore posted in installments, during the course of the posts a couple of victims emailed to ask what is my assessment of our chances of victory. It is very difficult to say. My assessment is that the oral argument was very close, perhaps 52-48 or 55-45 in our favor, but who can say really? The Court was plumbing what it considered the weaknesses in each side's arguments, and who can really say how the judges feel about the explanations each side offered.
My own two major impressions are ones stated earlier. The first is that our side's failure to stress, or even mention Congressional intent -- which the other side has for practical purposes never mentioned because the intent is so adverse to its position! -- was a mistake of the first magnitude. A close colleague, whose opinion I respect greatly, believes the failure to stress Congressional intent on oral argument will not matter. He feels the Court will read about it fully in the brief this writer filed. Because briefs filed by other lawyers were dealing so extensively with other matters, my brief took an unusual tack. It ignored other matters (except for the need for discovery into why SIPC and the Trustee chose CICO, discovery of whether this was done in defiance of Congressional intent in order to save SIPC from financial difficulties or even bankruptcy), and simply presented all the relevant statements in the Congressional history from 1970 to 1978, importantly including the floor statements by Senators and Congressmen. My colleague believes the Court, its clerks and its relevant staff members will read the brief (and presumably the attached addendum containing the relevant pages from the Congressional Record, from hearings, and from Congressional Reports). To my concern that this might not happen, he replies that it will happen because the Second Circuit, he says, is the nation's most prestigious Court of Appeals, with the most competent law clerks and staff. This answer sounds to me like local New York provincialism, of exactly the same kind that one often reads of and hears of coming from Washington, D.C., where it is regularly proclaimed that the U.S. Court of Appeals for the District of Columbia is the most important federal Court of Appeals in the land, as shown by the fact that a number of its judges have been elevated to the Supreme Court (Ginsberg, Scalia, Roberts, Thomas. And Bork was nominated.) So parochialism about one's local Court of Appeals (wherever it is) does not impress me. And I note, with regard to the claim that the Second Circuit will read and heed the Congressional intent, that the Circuit did not so much as mention the Congressional intent at the oral argument, that Judge Raggi made a remark implicitly disparaging its importance, and that it is hard to think that the Court will pay attention to it or properly think it crucial when our oral advocates did not think enough of it to mention it on oral argument (except for Helen's brief allusion to it), and when it is the focus of only one party's briefing, with that party not being one of the big shot New York City law firms but only a New England lawyer unknown to the Court. Maybe my colleague will prove correct, and maybe my skepticism will prove unfounded, as I surely hope, but I will believe it when I see it.
My second major impression is of the dire need to hire a true appellate expert -- presumably a major Supreme Court lawyer who also does extensive work in the federal courts of appeal -- to participate extensively in the writing of future appellate papers and to make the oral arguments on appeal. I extensively commented early-on in this essay on the terrible shortcomings that resulted when this was not done, and on the upcoming events for which it would be essential -- for a possible rehearing en banc sought by one side or the other on the net equity question, for a petition to the Supreme Court, by either side, for a hearing there on the net equity question, and for appellate arguments on other crucial issues (especially omnibus issues) which will be briefed and argued in the Bankruptcy Court this Spring and Summer. The hiring of a qualified, prestigious appellate counsel to represent us on Court of Appeals and Supreme Court matters seems to me to be a first order of business if the victims who have been reading this essay want to see their chances of success maximized rather than lessened.
Of course, maybe I'm all wrong. Maybe, despite the shortcomings I've alluded to, we will win on net equity in the Court of Appeals and/or, even without special, qualified appellate counsel, we will win on net equity in the Supreme Court too. And maybe, even without hiring special, qualified appellate counsel, we will win on other issues too in the Court of Appeals and the Supreme Court. All I can say is that after decades of observation and experience, including a stretch spent helping to prepare lawyers for oral arguments in the Supreme Court, I believe the victims' chances will be much better if experienced, qualified appellate/Supreme Court advocates are hired. This is a matter which, I think, should concern every victim, because every victim (myself included) has so much at stake.