Do you trust your financial account statements? Madoff investors did.
Do you think the SEC makes sure that your trades are executed? The SEC didn't check if Madoff made any trades -" even when they were told that the market volume of S&P 100 options were not enough to cover what Madoff reported in his clients' statements.
Do you think your investments are covered by SIPC insurance?
Madoff investors did.
shares to make more than $10,000 profits. Then Enron is exposed as a fraud and you were sued to give back the profits to offset the losses incurred by other investors. Of course that would never happen. But it is happening to innocent Madoff investors.
What if you found out that your pension plan was invested in a Ponzi
scheme and you were retired long enough to have been paid more than you put in. You would expect to be covered by the Pension Protection Act. However, if you were a long-time Madoff investor and took out more than you put in, you would get nothing from Securities Investors Protection Corporation (SIPC) insurance and then you would be sued for the difference. Deprived of your savings and income, you would suffer greatly. And you were innocent. And SIPC was created when the investment firms wanted to get rid of stock certificates and insure against the anticipated risk of fraudulent statements.
Let's say you invested in a mutual fund that had an account with a
Ponzi scheme. You would expect to receive SIPC insurance because of your losses. You learn that SIPC pays up to $500,000 per account and that would go to the mutual fund. You would get a tiny share if
anything. This is happening to thousands who indirectly invested in
Madoff through "feeder funds'.
Fortunately, Congressman Scott Garrett (R-NJ) understands that these wrongs must be righted to justify your confidence in your financial statements. Garrett's bill, the Equitable Treatment of Investors Act, would base your claim on your last statement - and not on the balance of what you put in and took out -" as it is now. The Act also protects innocent investors against being sued to repay the false profits they withdrew. Many hope this Act will be expanded to bring further justice to indirect investors. Of course, those parties who were complicit in the fraud will be severely punished.
In Garrett's own words, "If the current law is not followed, no customer can ever have confidence in his or her dealings with a broker. That is contrary to the policy goal of encouraging investment, which is critical to the economic renewal our country needs."
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