The Briefs Of The Trustee And SIPC On The Net Equity Question.

And, in his memorandum decision holding that there should be briefing on the net equity question, the Bankruptcy Judge said that � ??it is in the best interests of all customers for this Court to limit the Net Equity Issue to the determination of net equity (cash-in/cash-out vs. account statement balance as of November 30, 2008 vs. cash-in plus interest minus cash out . . . in accordance with a . . . scheduling order . . . to be submitted to this Court . . . .� ? � (Emphasis added.) The Court thereby made clear that the question whether interest should be added to the cash-in is before it on the net equity question. Yet, in its next to last paragraph, the Trustee's brief says � ??Certain claimants have suggested that the Trustee include an interest factor when calculating a customer's � ??cash-in/cash-out' figure to reflect the various entry points of investors in Madoff's lengthy scheme. Whether and to what extent such a calculation is appropriate is not before the Court in this briefing, nor are other particular nuances of the � ??cash-in/cash-out' method.� ? �

Thus, it would seem that the Trustee has taken it upon himself to revoke the Court's ruling that the question of whether interest should be added to the amount of cash-in if the cash-in/cash-out theory were to prevail is before the Court. It is amazing if the Trustee has in fact taken it upon himself to in fact countermand the Judge. What I suspect happened, however, is this (though I surely don't know for certain that my suspicion is correct): In accordance with the Judge's above-quoted instruction for submission to him of a briefing schedule, the Trustee submitted a schedule which the Judge signed. (It is the schedule under which we are all operating.) The scheduling order submitted by the Trustee said that

The briefing to be submitted to the Court pursuant to the Order shall be limited to discussing the proper interpretation of Net Equity, specifically the following two issues:

1. Whether a customer's Net Equity under SIPA is equal to � ??cash in/cash out� ? �; or

2. Whether a customer's Net Equity under SIPA is equal to the value of the securities positions and credit balance reflected in the customer's last statement.

This statement in the scheduling order regarding the forthcoming discussion of net equity, as you can see, did not include the issue of interest on cash-in, which the judge's opinion had said is part of the briefing. Not realizing the omission, the Judge signed the order. Now, relying on the order it submitted to the Court and he signed, the Trustee is claiming that the question of interest on net equity is not part of the briefing on net equity though the Judge's opinion said it was.

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