As early as December former Madoff investors joined together and formed BernardMadoffVictims.org Coalition ("The Coalition"). Their mission statement explains that they are an activist and support group empowering victims to change the system that allowed this fraud to happen and allows them to unite in restitution.
They are doing just that.
With two upcoming hearings the defrauded victims wanted to get their thoughts relayed to their elected officials. On Tuesday, July 14, 2009, The Congressional Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises will hold a hearing entitled "SEC OVERSIGHT: CURRENT STATE AND AGENDA". On Wednesday, July 15, 2009, The Senate Subcommittee on Securities, Insurance, and Investment will be holding a hearing entitled "REGULATING HEDGE FUNDS AND OTHER PRIVATE INVESTMENT POOLS".
It's been seven months since the victims first heard that their savings were lost. During this time they have joined together and educated themselves on the laws that pertain to the situation. They are working to make sure that the public knows those laws so that in the future, no one will ever have to go through the devastation that they are feeling now. They feel that the financial sector, as it currently exists, is a poorly regulated and therefore a dangerous place for people to invest their money.
If
customers received written confirmations of trades from a broker, as Madoff's
victims did, according to SIPA and SIPC Rule 502 they are entitled to those
securities even if no trades were ever made, as long as they were actual
securities that could have been purchased. Further, under SIPA, "net
equity" is defined as the value in a customer's account if the
debtor had liquidated, by sale or purchase on the filing date, or in the
case of Madoff customers, as of their November 30, 2008 account
statement. This was confirmed by the 2nd Circuit Court of Appeals of New
York in the New Times case.
However, based on the current actions of the trustee, Irving Picard, every American investor should pull their money out if it appreciates in value and open a new account with the principal and profits. Once that money appreciates in value, they should again do the same. He is only willing to pay SIPC insurance on the original money invested, totally disregarding any profits made (as reflected on the November 30th statement). Therefore, the insurance that is promised on every trade confirmation of a broker/dealer who is a member of the Securities Investor Protection Corporation ("SIPC") only applies to initial investments (less any money that may have been withdrawn). Mr. Picard is acting OUTSIDE the rules of the Securities Investor Protection Act ("SIPA") and is therefore acting illegally.
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