SIPC: Madoff Trustee's Major Settlement with Defender Feeder Fund Shows Importance of "Clawback" Tool in Recovery Process
Work of Trustee Picard Praised in New $93 Million Recovery Agreement Illustrating Importance of Issues Addressed in Petitions Before U.S. Supreme Court
WASHINGTON, March 24, 2015 /PRNewswire-USNewswire/ -- The Securities Investor Protection Corporation (SIPC) today praised the latest achievement of Madoff Trustee Irving H. Picard, who yesterday filed a motion in the United States Bankruptcy Court for the Southern District of New York seeking approval of a $93 million recovery agreement with Defender Limited and related entities.
Under the agreement, the trustee was able to "clawback" 100 percent of the fraudulent transfers and preference payments made to Defender, a Madoff feeder fund. The use of this recovery tool by Picard and future Securities Investor Protection Act (SIPA) trustees is now at risk under a Second Circuit Court of Appeals ruling that is the subject of petitions for certiorari by SIPC and Picard to the U.S. Supreme Court.
SIPC President Stephen Harbeck said: "This settlement is one of many recent significant additions to the Trustee's fund of 'customer property.' It shows the critical importance of the 'clawback' powers the Bankruptcy Code and the Securities Investor Protection Act provide to trustees seeking to recover fraudulent transfers. The settlement is a continuation of the Trustee's efforts to maximize the return to victims. It will make for a far more equitable distribution to those Madoff customers who have not yet received a return of all of their principal."
The total amount distributed in the Madoff liquidation proceeding to date exceeds $7.2 billion, which includes more than $823 million in committed advances from SIPC. When additional settlements awaiting distribution are taken into account, the total recovery to date in the Madoff liquidation proceeding totals $10.64 billion.
ABOUT SIPC
The Securities Investor Protection Corporation (http://www.sipc.org) is the U.S. investor's first line of defense in the event of the failure of a brokerage firm owing customers 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 for customer cash and/or securities held in custody with the broker for up to a maximum of $500,000 per customer. This figure includes a maximum of $250,000 on claims for cash. From the time Congress created it in 1970 through December 2013, SIPC has advanced $ 2.1 billion in order to make possible the recovery of $133 billion in assets for an estimated 772,000 investors.
All non-media/investor inquiries of SIPC should be directed to [email protected] or (202) 371-8300.
SOURCE Securities Investor Protection Corporation (SIPC)
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