As we approach the fifth anniversary of the collapse of the massive multi-billion dollar Bernard Madoff Ponzi scheme, a bipartisan bill has been introduced in the House of Representatives that would address one of the issues that seemed to most rankle Madoff’s defrauded victims: whether or not to calculate their losses based on the fraudulent account statements they received.
To change the rule that courts followed before Madoff, and in the Madoff litigation, which essentially ignored those statements, U.S. Representatives Scott Garrett (R-N.J.) and Carolyn Maloney (D-NY) have introduced H.R. 3482, the Restoring Main Street Investor Protection and Confidence Act of 2013.
Garrett, who chairs the House Financial Services Capital Markets and Government Sponsored Enterprises Subcommittee, and Maloney, who is the ranking member of the Subcommittee on Capital Markets and Government Sponsored Enterprises, are the lead sponsors of H.R. 3482.
“Our bill serves two key purposes,” said Garrett. “The first is to protect innocent investors from fraud, abuse, and malfeasance. The second is to foster greater confidence in U.S capital markets, which will help encourage economic growth, increase job creation, and efficiently allocate capital.
“By reforming and modernizing the Securities Investor Protection Act of 1970, we will ensure greater equity for victims of fraud, enhance efficient functioning of U.S. securities markets for main street investors, and strengthen the oversight and accountability of the Securities Investor Protection Corporation (SIPC). Given that physical securities are no longer individually mailed to customers, investors must be able to trust the SIPC seal of approval and have confidence in the account statements they receive.
“I fear, however, that if the current law is not modernized and SIPC coverage is not clarified, confidence in our securities markets could suffer. Indisputably, this outcome runs counter to the policy goal of encouraging investment, which is critical to the economic revival our country needs.”
“Markets run as much on confidence as capital, and this bill will restore investors’ confidence in the markets by modernizing the Securities Investor Protection Corporation, and by protecting innocent victims of Ponzi schemes and other frauds from further clawbacks by the very government agency that is charged with protecting them,” said Maloney.
At this time, it certainly remains to be seen if this bill has any significant chance of moving forward and becoming law.
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