SIPC NOW IDENTIFYING CUSTOMERS OF
NYC BROKERAGE FIRM UNDERGOING LIQUIDATION
Up to $3 Million May Have Been Lost by Under 200 Investors at Small Firm; Arrested Employee Under Investigation for Possible Misuse of Customer Assets.
NEW YORK CITY//December 28, 2006///The Securities Investor Protection Corporation (SIPC) is conducting an inventory of the assets of Paul L. Forchheimer & Co., Inc., 61 Broadway, New York City, and also is seeking to identify a full list of the customers of the now-shuttered brokerage firm.
SIPC was appointed earlier this month by a federal court to act as trustee in the Forchheimer & Co. liquidation proceeding in the wake of the arrest of the Aharon Weichselbaum, who was an employee at the brokerage firm. SIPC was created by Congress to maintain a special reserve fund to help investors at bankrupt brokerage firms.
Weichselbaum was apprehended by authorities on suspicion of diverting customer and Forchheimer & Co. assets. He is believed to have generated typewritten investor account statements, the accuracy and completeness of which will be analyzed by SIPC. SIPC investigators estimate that between $300,000 to $3 million in customer and Forchheimer & Co. assets may be missing and that the number of affected investors is likely to end up being fewer than 200.
SIPC President Stephen Harbeck said: "SIPC is carefully combing through the files and property of the firm. We want to ensure that we find all existing assets and compile a complete list of clients to be notified before the clock starts ticking on the claims submission process in this case."
SIPC was named trustee in the Forchheimer & Co. liquidation proceeding on December 12, 2006, with the law firm of Drinker Biddle & Reath, LLP appointed as counsel to the trustee. Immediately upon its appointment as trustee in the matter, SIPC was on site at the Forchheimer & Co. offices in New York City in order to secure the premises and begin the property inventory process. SIPC now is in the midst of gathering the fullest possible list of customers for the liquidation review process.
Weichselbaum was arrested as a flight risk after it was learned that he has dual citizenship in both the United States and Israel.
From the time Congress created it in 1970 through December 2005, the Securities Investor Protection Corporation (http://www.sipc.org) advanced $585 million in order to make possible the recovery of $14.2 billion in assets for an estimated 624,000 investors. Although not every investor is protected by SIPC, the Securities Investor Protection Corporation estimates that no fewer than 99 percent of persons who are eligible have been made whole in the failed brokerage firm cases that it has handled to date.
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 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.
CONTACT: Ailis Aaron Wolf, The Hastings Group, (703) 276-3265 or firstname.lastname@example.org.
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