Response To Messrs Picard And Harbeck Media Conference 5.14.09

Former Investors of Bernard Madoff Speak Out after Stephen Harbeck, president of the Securities Investor Protection Corporation (SIPC), and Irving H. Picard, the court-appointed trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS), held a phone-based news conference at Thursday (May 14, 2009).

The contention of SIPC and its trustee, Irving Picard, that to use the 11/30/08 customer balance would be to allow the criminal (MADOFF) to determine who gets paid is utter nonsense and it is supported by neither the Securities Investor Protection Act ("SIPA")nor by any case law decided under SIPA.

Indeed, SIPC has never before interpreted the statute in this way. What SIPC and Picard are really saying is that to use the 11/30/08 customer balance would be to allow Congress to determine how much investors get paid. SIPC does not want to follow the law because this would cost SIPC money and SIPC is only interested in saving itself money and covering up its own failure to properly assess its members for a sufficient amount to cover any potential liability.

Each Madoff customer controlled how much was in his/her account. The Madoff victims are not criminals. They are honest, law abiding citizens who relied upon the SEC to properly patrol the securities markets and they relied upon SIPC to properly assess its members so that the assurances of $500,000 in SIPC insurance were truthful.

If SIPC chose to charge Goldman Sachs a mere $150 per year so that Goldman Sachs could print on billions of dollars of trade confirmations that the customer's account was insured for $500,000 in SIPC insurance, that is a measure of SIPC's incompetence.

Although SIPC and Picard claim they are following the law, they cannot cite to anything in SIPA which allows them to define "net equity" as they have. Indeed, SIPA defines "net equity" as the balance in the customer's account less any sums the customer owes the broker and prohibits SIPC from changing that definition.

It is only by ignoring the law, that SIPC and Picard can take the position they have taken. See the attached response that Helen Davis Chaitman, Esq. wrote to the May 6, 2009 article by Messrs. Picard and Harbeck published in nytimes.com.

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Contact Details

Company Name: Bernard Madoff Victims S upport Group
Issued By: Helen Chaitman
Phone: 908-303-4568
Address: 2229 Sherwood Court Minnetonka, MN
Zip: 85374
Website: Visit the website

by Helen Chaitman (few years ago!)

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