SIPC STATEMENT ON "NET EQUITY" COURT HEARING
WASHINGTON, D.C. – February 2, 2010 - 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:
"Regarding the question of 'net equity', for which a hearing is being held today at the United States Bankruptcy Court for the Southern District of New York, we believe 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 must await the court's ruling on the matter. We look forward to the decision resolving this matter."
SIPC's primary brief can be found at 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.
MEDIA CONTACT: Ailis Aaron Wolf, (703) 276-3265 or firstname.lastname@example.org. All investor inquiries of SIPC should be directed to email@example.com or (202) 371-8300.
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