NEW YORK CITY & WASHINGTON, D.C. - July 1, 2009 - A total of $231 million in Securities Investor Protection Corporation (SIPC) funds has been committed in the determination of 543 claims submitted by Bernard L. Madoff Investment Securities LLC (BLMIS) investors, according to Irving H. Picard, the court-appointed trustee for the liquidation of BLMIS under the Securities Investor Protection Act (SIPA), and SIPC President Stephen Harbeck.
As such, the amount of SIPC funds committed in the Madoff liquidation exceeds the total amount paid in the previous 11 largest SIPA liquidations. The amount reflects major progress since May 14, 2009, when Picard and Harbeck announced a total of $61.4 million in SIPC funds committed in determination letters sent to 125 BLMIS claimants.
These 543 determined customer claims have been allowed in the total amount of $2.972 billion, including $2.741 billion in allowed customer claims that exceed the statutory limit of SIPA protection. Under SIPA, customers with allowed claims share on a pro-rata basis in customer property recovered by the Trustee. SIPC-funded protection is only used to supplement the distribution up to the statutory limit of $500,000 per customer on allowed claims. For that purpose, SIPC maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms.
The only source of payment for the portion of these and other allowed claims in excess of the $500,000 from SIPC is the recovery of BLMIS property by the Trustee through the various actions he has and will undertake, including avoidance actions and other recoveries of BLMIS property.
It is the Trustee’s intent, pursuant to SIPA, to submit a motion at an appropriate time in the future for an order of the Bankruptcy Court to allocate to the fund of customer property the funds and other property he has recovered and will recover and to distribute customer property pro rata among BLMIS customers with allowed claims.
Picard and Harbeck once again sought to dispel incorrect information surrounding the BLMIS liquidation proceeding: They stressed that trustee expenses are not paid out of customer property. Harbeck said: “Contrary to what has been suggested by some entirely ill-informed parties, all of the expenses of this work have been paid for by SIPC. Customer funds are never used to pay for administrative expenses in a liquidation proceeding.”
LAST MINUTE CLAIMS
Claims must be received on or before Thursday, July 2, 2009 by the Trustee's claims agent, AlixPartners LLP.
To assure timely receipt, last-minute filers can deliver their claims by hand to AlixPartners LLP c/o the Trustee's law firm, Baker & Hostetler LLP, 45 Rockefeller Plaza, New York, NY 10111 until midnight, Thursday, July 2, 2009.