A New Jersey congressman says the Securities and Exchange Commission was more interested in protecting investment brokers – and its own interests – than Bernie Madoff’s victims when it developed its formula for claims filed by the Ponzi scheme artist’s victims. Congressman Garrett’s 10-3-2011 Press Release
Congressman Garrett’s 10-3-2011 Letter to SEC Chairwoman Mary Schapiro
H.R. 757
Summary:
Amends the Securities Investor Protection Act of 1970 to revise the definition of “net equity.”
States that, in determining net equity, the positions, options, and contracts of a customer held by the debtor, and any indebtedness of the customer to the debtor, shall be determined based on: (1) the information contained in the last statement received by the customer from the debtor before the filing date; and (2) any additional specific confirmations of the customer’s positions, options, contracts, or indebtedness received after such last statement but before the filing date.
Prohibits reliance on the final statement of the debtor to customer, however, if the customer: (1) knew the debtor was involved in fraudulent activity with respect to any of its customers; or (2) as a registered broker, dealer, or investment adviser under specified securities laws, or a person required to be so registered, knew, or should have known, that the debtor was involved in such a fraudulent activity and did not notify the Securities Investor Protection Corporation (SIPC), Securities and Exchange Commission (SEC), or law enforcement personnel that the debtor was so involved.
Prohibits a trustee in a liquidation proceeding from recovering any property transferred by the debtor to a customer before the filing date unless, at the time of such transfer, the customer meets the same criteria.
Transfers from SIPC to the SEC authority to nominate to a court persons for appointment as trustee for the liquidation of a debtor’s business and as attorney for the trustee.
Statement Accompanying Introduction of Garrett Bill
