Madoff victims in South Florida want more
Attorney Helen Davis Chaitman came away from a series of meetings with about 350 Bernard Madoff victims in South Florida this week fighting mad.
She said she’d continue working with lawmakers to push for full compensation for victims of the ponzi scheme.
Chaitman, an attorney from New Jersey who also lost her retirement savings to Madoff, has testified before Congress about the Madoff scam and its impact. More than 2,000 Floridians were investors.
Chaitman was in South Florida to talk to Madoff investors about the Securities Investor Protection Corp. or SIPC, a privately funded corporation that insures brokerage accounts up to $500,000.
In the liquidation of the Madoff assets, SIPC has taken the position that investors won’t be reimbursed based on what their accounts were worth as of the last statement before Madoff’s Dec. 2008 arrest.
Instead, Chaitman said SIPC wants to compute its payouts on “net investments.” That would be the amount deposited into an account with Madoff, minus any withdrawals.
For long-term Madoff investors who thought their money was growing over the years, the “net investment” payouts would likely be far smaller than one based on the final statement. She says the "net investment" payouts would be the first time in 40 years that accounts are not liquidated based on their final values. And she claims this is not what is specified by the law governing SIPC.
"If they had told us before we made the investment, we wouldn't have a problem with it," she said. “I plan to get SIPC to abide by the law.”




Harriet Johnson Brackey, the personal finance columnist for the Sun Sentinel, is an award-winning business reporter. Her columns for 2008 were named "The Best in the Business," a national award chosen by her colleagues at the Society of American Business Editors and Writers.
Comments
"She says the "net investment" payouts would be the first time in 40 years that accounts are not liquidated based on their final values"
This argument is about as ignorant as it gets.
The 'final value' was ZERO. She wants clients to be reimbursed for FICTITIOUS money?
I truly hope she gets what she deserves, and that is SIPC 'to abide by the law.' The true value of her clients assets was, and is, ZERO
Why should taxpayers bear the burden? Don't forget she is looking out for herself - her fee is a nice slice the bailout.
These poor people failed to exercise due diligence. And although that's sad, there is no government bailout for the dumb.
Posted by: Mark Wolfinger | January 14, 2010 9:06 PM
The previous poster, Mr. Wolfinger, chooses to attack the victims rather than understand the law. While it's to his credit that he was not a Madoff investor, he is apparently unaware that no Madoff victim is asking for, nor expecting a government bailout. After all gov't bailouts are only for banks and insurance companies that nearly destroyed our economy. Back to Mr. Wolfinger who thinks that taxpayers are baing asked to bear the burden. Nothing could be further from the truth. The securities industry got a free ride for over a decade proclaiming that your investments are protected. So protected in fact that SIPC was nearly fatally underfunded. The purpose of the insurance, Mr. Wolfinger, is to protect investors should their securities company fail. Why does it bother you so much that Madoff investors want the law to be enforced? Why does it bother you so little that the SEC and SIPC have done everything they can, not just to screw the Madoff investors, but all investors. SIPC is a SCAM, plain & simple to get the investors to turn over their securities to the brokers to hold in street name, and keep it for their "pleasure" and profit. Oh, and btw, this is the very reason that Madoff was so fabulously successful. If there was no SIPC, there never would have been a Madoff ponzi scheme. Read the SIPA law.
Posted by: Richard Friedman | January 14, 2010 10:33 PM
The notion that inverstors in a Ponzi scheme should be reimbursed for fictional profits is insane. It's plain common sense if you gave Madoff $500,000 and you withdrew $100,000 you are owed 400,000. You are not owed the accrued fictional interest that appeared on your statements.
Posted by: Oh Please | January 14, 2010 11:46 PM
Of COURSE they want more. They wouldn't be IN this situation if it weren't for the promise of money for nothing.
There's a reason greed is one of the 7 deadlies, people.
Posted by: Painkiller Jeff | January 15, 2010 1:31 AM
Mr. Friedman, in your response above, you claim they are not asking for a govt. bailout. Did you not read the following in the article?
She said she’d continue working with lawmakers to push for full compensation for victims of the ponzi scheme".
Posted by: phil | January 15, 2010 7:08 AM
I believe that if the SPIC is a government institution, then any funds they supply are taxpayer based. It is simple logic.
# Terms of SIPC help. Customers of a failed brokerage firm get back all securities (such as stocks and bonds) that already are registered in their name or are in the process of being registered. After this first step, the firm’s remaining customer assets are then divided on a pro rata basis with funds shared in proportion to the size of claims. If sufficient funds are not available in the firm’s customer accounts to satisfy claims within these limits, the reserve funds of SIPC are used to supplement the distribution, up to a ceiling of $500,000 per customer, including a maximum of $100,000 for cash claims. Additional funds may be available to satisfy the remainder of customer claims after the cost of liquidating the brokerage firm is taken into account.
How claims are valued. Typically, when SIPC asks a court to put a troubled brokerage firm in liquidation, the financial worth of a customer’s account is calculated as of the “filing date.” Wherever possible, the actual stocks and other securities owned by a customer are returned to them. To accomplish this, SIPC’s reserve funds will be used, if necessary, to purchase replacement securities (such as stocks) in the open market. It is always possible that market changes or fraud at the failed brokerage firm (or elsewhere) will result in the returned securities having lost some – or even all – of their value. In other cases, the securities may have increased in value.
Not sure it says anything about the date here, however, this might clear up some of the confusion experienced by people.
Posted by: Alan | January 15, 2010 7:56 AM
WE THE PEOPLE (Have Had Enough)
Wall Street may effectively own Washington DC and the politicians but they do not own us.
WE THE PEOPLE ARE UNDER NO OBLIGATION TO ACCEPT THIS.
WE HAVE RIGHTS.
WE THE PEOPLE have the freedom to associate - or not.
WE THE PEOPLE have the right to demand legal tender in payment of debts owed us.
WE THE PEOPLE have the right to demand that these institutions eat their own cooking on each and every one of the loans they securitized and peddled during these years without fair and full disclosure to the buyers that these loans were rife with fraud.
WE THE PEOPLE have the right - and the ability - to take personal, lawful action with specific, lawful political and business-oriented goals, including permanent structural changes that will end "too big to fail" and "rip off the consumer on demand" policies, including the full reinstatement of Glass-Steagall which will END financial speculation and dealing in all of its forms by firms that have access to Federal Reserve credit and/or any sort of public backstop.
Make this message - this post - viral. Send it to your associates. Send it to the media. Send it to politicians. Get involved and do it now.
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Posted by: russ | January 15, 2010 10:02 AM
The greed of the Madoff investors, is really sickening.This was not a savings account. It was an investment.Values go up and down. Just like stocks.Where do they get the idea that they are owed anything more than what they originally invested? If they are even entitled to that.
Posted by: Suckers | January 15, 2010 10:57 AM
Mr. Friedman has no idea of which he speaks.
As was already pointed out, these are investors who made bad investments. Too bad. That's the way investing works, specially when you fail to exercise due diligence.
We heard nary a peep from any of them when they were scoring above average returns. They did not offer to return any excess 'profits' to those who were less fortunate. High returns were just fine. Bur losing money - oh, no. Must be someone to blame, someone to sue, some dirty lawyer who's going to battle for them in an effort to earn many millions in fees for themselves.
But the scheme blew up, the investors lost their money and that should be the end of it. Not the criminal end of it, but the end from the customer's perspective.
What bothers me the most are the lawyers like Mr. attorney Friedman who are not looking to get back something they lost, they want the FDIC, SIPC, or anyone else to repay their clients so they can get their share of taxpayer money.
It's the attorneys - Mr. know-the-law Friedman who are lower that dirt in this mess.
You want me to read the law? I want you to develop a sense of what's fair and just. These are just crybabies who want it all: High returns with zero risk.
That's not the way it works.
Posted by: Mark Wolfinger | January 15, 2010 7:37 PM
Mr. Friedman has no idea of which he speaks.
As was already pointed out, these are investors who made bad investments. Too bad. That's the way investing works, specially when you fail to exercise due diligence.
We heard nary a peep from any of them when they were scoring above average returns. They did not offer to return any excess 'profits' to those who were less fortunate. High returns were just fine. Bur losing money - oh, no. Must be someone to blame, someone to sue, some dirty lawyer who's going to battle for them in an effort to earn many millions in fees for themselves.
But the scheme blew up, the investors lost their money and that should be the end of it. Not the criminal end of it, but the end from the customer's perspective.
What bothers me the most are the lawyers like Mr. attorney Friedman who are not looking to get back something they lost, they want the FDIC, SIPC, or anyone else to repay their clients so they can get their share of taxpayer money.
It's the attorneys - Mr. know-the-law Friedman who are lower that dirt in this mess.
You want me to read the law? I want you to develop a sense of what's fair and just. These are just crybabies who want it all: High returns with zero risk.
That's not the way it works.
Posted by: Mark Wolfinger | January 15, 2010 7:37 PM
I have a feeling these bastards will get "bailed" out. It's a shame.
Posted by: Polo | January 16, 2010 7:42 AM
WE THE PEOPLE... really have no rights. We are lemmings swimming to the sea of destruction via debt.
Did these people bury their heads in the sand, or know that Bernie had an "in" with the SEC and worked magic?
NOBODY who really looked into this guy believed his #'s and when it all falls apart people whine and 8itch.
Posted by: Haywood Matthews | January 16, 2010 8:28 PM
although i am sympathetic to people who may llse money in any sort of scam-if you think the returns these people were getting and expecting were what a reasonable person would expect-you are totally wrong. guarantee me those rates or returns and if i were foolish enough to believe in it and be scammed to be protected by the US taxpayer-you must be on some good drugs. GOOD LUCK but no way Jose.
Posted by: sam | January 17, 2010 4:30 PM
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President Obama's proposed financial crisis responsibility fee on the largest banks will help get back the taxpayer money that bailed out those same banks, without penalizing community banks and small firms.
We need a consumer financial protection agency to provide strong oversight so banks can't play Russian roulette with our economy again, and to protect customers from being bled dry.
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Posted by: livid | January 21, 2010 6:57 PM
Protecting Consumers Will Undermine Capitalism???????
Writing the Rules
So the fight is on to see whether consumers will get an agency that looks out only for them. Elizabeth Warren, the Harvard professor who originally came up with the idea of a consumer financial agency, sent a letter on Jan. 20 telling supporters that “the next few weeks will determine whether families will have to play by rules written by the banks and for the banks -- rules that let the industry get away with anything.”
The day before, Ralph Nader penned a note to Connecticut’s lame duck Senator Christopher Dodd, who, much to the glee of business, has reportedly been warming up to the ABA’s idea of keeping the consumer protection function under the wraps of the safety and soundness folks.
Nader told Dodd that a decision to drop the agency would “signal to consumers across the land that you, as chair of the Committee on Banking, Housing and Urban Affairs, have lost touch with Main Street interests.” There could be motivation for Dodd to wean himself away from any populist inclinations. He will be needing a job soon, and it’s probably a safe guess that he won’t be pitching for a five-figure gig with some do-good consumer group.
http://www.bloomberg.com/apps/news?pid=20601039&sid=agIuKtMz.dnQ
Posted by: susan | January 25, 2010 10:55 PM
Geithner's Illegal Money-Laundering Scheme Exposed; Harry Markopolos Says “Don’t Trust Your Government”
Markopolos and a few of his associates tracked the ponzi scheme across the Atlantic and found evidence of money laundering and organized crime in the US and Europe. No doubt the details will be interesting.
http://tinyurl.com/ygwm82c
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