WASHINGTON, Feb. 24 /PRNewswire-USNewswire/ -- Stephen Harbeck, president of the Securities Investor Protection Corporation (SIPC), which maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms, issued the following statement today:
"From the outset of the Bernard L. Madoff Investment Securities LLC (Madoff) liquidation proceeding, the Securities Investor Protection Corporation has made it clear that our No. 1 goal is to make sure that every eligible Madoff investor receives every penny that he is or she is entitled to receive per the recovery process.
"We have a great deal of empathy for the Madoff victims. That is why we have worked around the clock for more than a year to expedite this matter despite the unprecedented complexities arising from the web of deceit spun by Mr. Madoff. Our concern for the victims was also the reason why we worked with Irving H. Picard, the court-appointed trustee for the Madoff liquidation, to establish a special hardship procedure for particularly hard-hit victims requiring special attention.
"That is why we are disappointed to see that certain attorneys are exploiting the plight of these victims to incorrectly direct their anger and frustration at SIPC. Sadly, this frivolous litigation will have the effect of making it harder for SIPC to focus all of its time and attention on aiding the Madoff victims.
"That being said, SIPC is not now and never was a FDIC-like 'insurance' entity.
"Regarding the question of 'net equity', which the United States Bankruptcy Court for the Southern District of New York is now weighing, we firmly believe that the calculation being used by Irving H. Picard, the court-appointed trustee for the liquidation of Bernard L. Madoff Investment Securities LLC of New York, NY, is correct.
"This determination is completely consistent with past precedent on the matter.
"SIPC has filed two extensive briefs with the Court, which explain our position in detail. At this time, we are awaiting the court's ruling on the matter. We look forward to the decision resolving this matter."
SIPC's primary brief in the United States Bankruptcy Court for the Southern District of New York proceeding can be found at http://www.sipc.org/pdf/519_Memorandum_of_Law-1.pdf.
The Securities Investor Protection Corporation is the U.S. investor's first line of defense in the event a brokerage firm fails, owing customer cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds.
The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities - such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash. From the time Congress created it in 1970 through December 2008, SIPC has advanced $520 million in order to make possible the recovery of $160 billion in assets for an estimated 761,000 investors.
SOURCE Securities Investor Protection Corporation, Washington, D.C.