$500,000 isn’t a lot of money if you just lost hundreds of millions with Bernie Madoff, but if you’re a small investor looking at a destitute retirement, there might be a glimmer of hope. The SIPC can provide up to $500,000 to account holders who were the victims of theft.
WSJ: The court-appointed trustee, Irving Picard, who is in control of the firm’s U.S. operations, will decide whether the trading arm of the firm — essentially a middleman between buyers and sellers of securities — can be sold.
Mr. Picard will mail claim forms to customers of the firm’s investment-advisory business, review their claims and determine how to try to satisfy them using a combination of firm assets and funds held by SIPC, which was created by Congress and funded by the securities industry.
SIPC is set up to provide as much as $500,000 per customer for claims of theft from a brokerage firm. With about $1.6 billion currently on hand, SIPC could satisfy claims of more than 3,000 customers, (SIPC President Stephen) Harbeck said.
It sounds like this will take a while to sort out, and we think there will be some debate on whether the Ponzi scheme actually constituted theft. Given the magnitude of the crisis, we wouldn’t be surprised to see an ultimate decision come down favourable to investors, especially since the SIPC serves a lot of ethical money managers that want to avoid getting tarred in this fiasco. Again, not much help if your a multi-million dollar endowment, or a hedge fund. But good news if ou’re an 85-year old Florida retiree with a paid-off mortgage.