What good is insurance if after the storm you do not get paid? What good is insurance if the premiums charged are so badly mispriced that they misrepresent and do not cover the embedded risks? Welcome to the world of the Securities Investor Protection Corporation.
Is SIPC a mere facade presented by the Wall Street titans?
Let’s get the take of those who recently relied upon SIPC to fulfill its obligations. To whom do I refer? The victims of the Madoff scam.
If these investors were not protected, then how are we to believe that other investors will be protected on a going forward basis?
Why do I make that statement? None other than current head of the SEC Mary Schapiro addressed this topic in recent Congressional testimony. In a press release put out by Madoff victims, Schapiro admitted that SIPC did not have sufficient funds to pay all of the Madoff claims.
Who funds SIPC? The Wall Street banks. Yes, those banks that have been printing massive revenues and believe that they are back to ‘business as usual.’ Why aren’t the premiums immediately increased on these institutions to properly compensate Madoff victims?
To the extent that certain Madoff investors were aware of the Ponzi scam, obviously they should not receive restitution. I have to believe that number is in the distinct minority.
Given the general lack of confidence in our financial regulators, both the SEC and FINRA, would Congress have the heart and courage to take on the financial behemoths on Wall Street in an attempt to protect the investing public?
These questions and issues lie at the core of badly needed financial regulatory reform. Yes, that reform which seems to be on the back burner now that the markets have rebounded and Wall Street is printing money once again.
Make no mistake, though, that pot is still boiling and these questions need to be fully addressed and answered to the public’s satisfaction.
For a deeper understanding of these questions from the perspectives of the victims of the Madoff scam, please read this recent press release from the Bernard Madoff Victims Coalition. Click on the image below to access a PDF of the full 2-page press release. Let me know what you think.
Social Security funds are limited and people have been encouraged to save throughout their lifetime so that when the time comes for them to retire, they do not have to rely on their family, the state or the government. The SEC was said to be monitoring securities and investment houses so that a Madoff scheme could not take place. Well, a government run agency FAILED US. Well, so the law says if this happens, the the SIPC will pay investors up to $500,000 because of fraud. Another government run agency states they will change the law and pay only on net equity. Any human being knows that the purpose of an investment is to use the interest and keep the principal. BUT now, the SIPC is punishing those for doing what is right. To add salt to the wounds, the attorneys for the bankruptcy are asking for $15,500,000 for services. So, the attorneys get paid and the victims don’t. All this adds up to saying why would anyone trust their money with any investor. Should they bury a safe and keep their money. They get just as much protection that way. Our country runs on the Wall St. investments. If investors are not protected against fraud, then why would they invest. They know there is risk..but risk is different from fraud and theft.
I ask you to fight the SIPC, your investment could be the next fraud.
Judith A. Rafferty
New Milford, CT