SIPC now covers ponzi schemes?

K

KINGOFSHORTS

Why is the SIPC working to recover money to investors who paid into a Ponzi scheme? I wonder how long before the Government decides to raise SIPC coverage and make it retroactive so they can recover 100% of the losses.

I sent an email to SIPC with a few questions. I will post the answer here. Lets see what they say.
 
1:21 and no reply regarding my basic questions to SIPC.



Unless Madeoff investors actually had securities purchased and held by Madeoff and somehow they were "Misplaced" SIPC might have something to recover.

The fact that no securities were ever purchased, his "Hedge Fund" a member of the SIPC and the fact that it was no investment but a fradulent Ponzi scheme the whole thing falls out of the scope of SIPC to begin with.


So anyone here, why is SIPC working towards returning nonexistant assets to customers who partook in a ponzi scheme?
 
I am not sure the investors will get back anything, the securities are protected up to 500k but how many clients actually held real securities is the question.
 
Quote from snowhite:

I am not sure the investors will get back anything, the securities are protected up to 500k but how many clients actually held real securities is the question.
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Thats the question, if no securities were purchased on behalf of the investors then there is no recovery.

Also They were not members of SIPC and did not pay into SIPC so technically they have no recourse.


It was a Ponzi scheme, SIPC does not cover them, if they did all those HYIP idiots who put money in those "Investments" would be able to go to SIPC and make claims.
 
Quote from KINGOFSHORTS:

Thats the question, if no securities were purchased on behalf of the investors then there is no recovery.

Also They were not members of SIPC and did not pay into SIPC so technically they have no recourse.


It was a Ponzi scheme, SIPC does not cover them, if they did all those HYIP idiots who put money in those "Investments" would be able to go to SIPC and make claims.
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Here's my take....

My understanding is that all accounts were brokerage accounts, which does fall under the SIPC. It is my gut feeling that SIPC will attempt to pay off investors b/c of the fallout of the SEC and their lack of oversight. It's probably more of a political thing in that regard. There's even speculation that SIPC may enter the mkt and replace all securities on the Madoff statements

http://www.streetinsider.com/Inside...cams+Could+Save+The+Stock+Market/4243249.html
 
You're making a series of errant assumptions about the structure of these accounts.


Quote from KINGOFSHORTS:

Thats the question, if no securities were purchased on behalf of the investors then there is no recovery.

Also They were not members of SIPC and did not pay into SIPC so technically they have no recourse.


It was a Ponzi scheme, SIPC does not cover them, if they did all those HYIP idiots who put money in those "Investments" would be able to go to SIPC and make claims.
More...
 
Quote from cane1214:

Here's my take....

My understanding is that all accounts were brokerage accounts, which does fall under the SIPC. It is my gut feeling that SIPC will attempt to pay off investors b/c of the fallout of the SEC and their lack of oversight. It's probably more of a political thing in that regard. There's even speculation that SIPC may enter the mkt and replace all securities on the Madoff statements

http://www.streetinsider.com/Inside...cams+Could+Save+The+Stock+Market/4243249.html
More...


Fake statements does not = actually purchases of said securities. If no securities ever changed hands and all Madoff did was take money from new investors to pay older investors and generated bogus statements that does not mean SIPC gets involved.

The thing was a Ponzi scheme. I have not heard a reply yet from SIPC either. They should be able to clarify this.
 
under existing regs, i dont see how SIPC can cover this

hedge funds have high entry requirements for investors, and low requirements for the funds themselves

kind of 'you're all rich folks, gambling money you can afford to lose, and it's all between yourselves'

but then again, they're pretty much making it up as they go along this year, no reg said AIG gets 150 bill either

so the taxpayer is probably fucked, sending a welfare check to palm beach
 
Fraud is covered and cash up to 100k is covered. (500k in securities).

So I'd say worse case Madoff investors will be getting a hundo each from the SIPC.

If Madoff was faking statements showing accounts owning at least a half mil each in securities-a safe bet-then I'd guess those folks will have a solid argument to receive 500k.

Case in point. You open an account for $500,000 with a registered firm and inform your broker to buy 500k in stock. He sends you a bogus confirm and steals your funds. You're covered.

Quote from KINGOFSHORTS:

Fake statements does not = actually purchases of said securities. If no securities ever changed hands and all Madoff did was take money from new investors to pay older investors and generated bogus statements that does not mean SIPC gets involved.

The thing was a Ponzi scheme. I have not heard a reply yet from SIPC either. They should be able to clarify this.
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