by Brian Mahany
The title of this blog is actually a quote from Joseph Borg, director of the Alabama Securities Commission. Borg testified before a Congressional subcommittee examining proposals to help Ponzi scheme victims. Congress wants SIPC (the Securities Investors Protection Corp.) to reimburse more victims for their losses. Those sentiments are laudable and make great sound bites. Unfortunately, SIPC doesn’t have the money and Congress isn’t likely to approve more funding.
The House is presently debating several measures, all of which would make more money available for Ponzi scheme victims. Without a funding source, however, the measures are likely to fail.
Currently SIPC will pay investors up to $500,000 if a brokerage firm goes under and their cash or securities go missing. The money comes from a tax on brokerage firm revenue. Unfortunately , there are a fair number of exceptions meaning that losses often aren’t covered. For example, investors who gave billions to Allen Stanford might not get anything from SIPC because the current rules don’t cover losses from offshore banks.
Post Bernie Madoff there has been much talk of offering more protection for victims. We know families that have lost everything – their entire life savings – and are not eligible for assistance.
Performing some due diligence before you invest is always the best option. If you still find yourself a victim, seek legal representation as soon as possible. Stockbrokers, brokerage firms and investment advisors may be responsible for making the bad recommendation or for not during their own due diligence.
Often times a large Ponzi scheme can wipe out an entire brokerage firm or exceed available insurance coverages. Being first in line is important. Unfortunately, too many investors rely on the government for help. If SIPC coverage doesn’t apply or the losses exceed $500,000 it’s important to be at the front of the line.
The stockbroker fraud and asset recovery lawyers at Mahany & Ertl have helped many people get back their hard earned money. In most cases, legal fees can be handled on a contingent fee basis meaning you owe us nothing for our services unless we win and collect.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota. Services available in many jurisdictions.