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$
50 bn. fraud-rich Madoff firm to be sold off
NEW
YORK, (AFP) - US authorities said Monday they were liquidating
Bernard L. Madoff Investment Securities LLC of New York,
following his arrest for alleged fraud to the tune of
50 billion dollars.
The Securities Investor Protection Corporation (SIPC),
which provides a Congress-authorized special reserve
fund to help investors at failed brokerage firms, said
it was liquidating the Madoff company.
“Upon information provided by the United States
Securities and Exchange Commission and the Financial
Industry Regulatory Authority, it is clear that the
customers of the Madoff firm need the protections available
under federal law,” said SIPC president and CEO
Stephen Harbeck in a statement.
Global finance giants admitted huge potential losses
on Monday in a suspected pyramid fraud scam run by Madoff,
a 70-year-old Wall Street Veteran.
Madoff was arrested on Thursday and allegedly confessed
to defrauding investors of 50 billion dollars in a scam
that collapsed after clients asked for their money back
due to the global financial crisis.
US authorities allege that Madoff delivered consistently
strong returns to clients by secretly using the principal
investment from new investors for payments to other
investors in what is known as a “pyramid fraud.”
The US district court for the Southern District of New
York appointed Irvin Picard as trustee for liquidating
the brokerage firm and designated law firm Baker &
Hostetler LLP as Picard’s counsel.
“Picard has served as trustee in more brokerage
firm liquidations than any other individual. SIPC and
the trustee are dedicated to returning assets to customers
as promptly as possible,” Harbeck added.
SIPC indicated it was liquiditating the company under
the Securities Investor Protection Act (SIPA), which
arranges for the transfer of funds from a failed brokerage
firm to a different one.
But Harbeck warned that “it is unlikely that SIPC
and the trustee will be able to transfer the customer
accounts of the firm to a solvent brokerage firm”
due to the state of the firm’s records.
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