The man in the middle of the Madoff mess

As the coordinator of BernardMadoffVictims.org, a secure, online group of 400 former Madoff investors, I find this story and the one by Ms. Henriques appalling and highly inaccurate.
I remember learning about Yellow Journalism in school and thought our country was well beyond that. We can call this story erroneous, we can call it misinformation, we can call it anything we want, but regardless of the name, it is highly inaccurate information. I personally don't feel that "Mr. Picard is doing the best he can in a tough situation".
He is working for the Securities Investors Protection Corp, and I don't see how he is protecting investors. The statute of SIPC is defined to promptly pay investors the value or legitimate expectation of their securities at the time the broker/dealer becomes insolvent. For Madoff victims, that is the value of their statement as of Nov 30, 2008.
Mr. Picard has redefined this value which has a tremendous impact not only on Madoff victims but on every broker/dealer and on every customer of these broker/dealers in the country.
If investors are no longer protected by SIPC insurance for the value of their accounts (upto the $500,000 limit), then every trade confirmation that gets sent out to customers from every broker/dealer is false.
This may very well result in a huge decline in investments, once this fact becomes evident.
Mr. Picard, has the ability to single handedly affect the very essence of our investment system.
I wouldn't say that is doing the best he can. Would you?

Ms. Ambrosino:

I feel for you. Regardless of what I say here, I wholeheartedly believe that you got screwed. And while I don't agree with a lot of what you're saying, I respect that you gotta keep fighting.

That being said, I disagree with your comments.

First of all, this seems to be a pretty fair article. He's not saying that Picard is right and that the victims or wrong, or vice versa. The fact that article the article does not express your entire view doesn't classify it as yellow journalism. There are definitely Madoff stories that should be classified as such: the Nocera piece in the NY Times was just as much an example of a one-sided opinion as the Chaitman piece in the NY Times was. I don't put this Henriques piece in the same category as these two.

And yes, SIPC rules do say that it will reimburse up to $500,000 of your investment but there are rules for these rules. First of all, the brokerage has to fail. Second of all, your securities need to have been stolen. The former is probably true but the latter is not since Madoff didn't buy any securities in the first place. Your cash was stolen (and yes it was stolen), not your securities. More profoundly, SIPC also states that they can't help you if you lose money because of securities fraud. No one on either side of the argument is saying that there was no fraud here.

I may be splitting hairs over the SIPC rules with what I just said but that's how the law works. It's interpreted, reinterpreted, and broken apart in a thousand pieces, leaving a judge or jury to out it back together. Again, this is how the law works...Helen Davis Chaitman would agree with me on that last part.

And until that the law pieces together all the legal ramblings, Picard will do exactly what he's doing. It's a slow process and I respect that you and all the Madoff victims awaiting reimbursement are mad. And you should be mad, just not at Picard. Is Madoff a scum-bucket? Yes. Does the SEC need to take a big chunk of the blame for this? Absolutely. Do you need to take some blame for not performing enough due diligence? I don't know but I know that many of Madoff victims need to take some blame here. Does Picard need to take any blame? Not that I can see. Again, you're mad and need money now, but life is not fair in many respects.

Mr. Klerg,
Much has been said on both sides of this issue. I am a Madoff victim and I refuse to endorse the view that the investors bear a responsibility for not doing "due diligence." I used the BEST SOURCE for DUE DILIGENCE, THE SEC. The SEC endorsed Madoff over and over again. I was a direct investor with Avellino and Bienes, 2 of the most disgusting participants in this fraud. When the SEC closed them down in 1992, the SEC did not investigate where the A. & B. money was going, although they knew it was going to Madoff. A. & B. were illegally selling unregistered securities. Why wouldn't the SEC investigate Madoff at that time? We are not talking about incompetence here, we are talking about corruption. When my money was returned to me in 1992, the SEC invited me to invest my money DIRECTLY with BLMIS. They gave me perission and endorsed this crook. Due you know a higher source of "DUE DILIGENCE" OTHER THAN THE SEC?

Ms. Hallo:

Do I know a better source? To tell you the truth, no. I'm not qualified to say whether or not one information source is better than another when it comes to investing.

But I do know that the SEC is not the only source for investment info. It's at this point that I'll recall my due diligence experience, as you just did:

I've been hardcore investing for about three years while passively investing for many years before that. I chose to invest strictly in mutual funds and chose to do it over a long stretch of years. I put my money with three of the well-known "discount brokerages," investing in a total of 11 mutual funds. This spans across my 401(k), Roth IRA, SEP-IRA and a few brokerage accounts.

I picked these eleven funds after reviewing their 10-year track record, fees, stock composition, fund management and reading their prospectuses cover to cover. Most of this was done online, using tools on the Fidelity & Morningstar websites as well as Yahoo! Finance. I also spoke to two fee-based financial planners about overall diversification principles.

When the Madoff scandal broke, I became very concerned as to whether or not I could be ripped off, despite my working with the "safe" brokerages. I went online again, reading articles on sites like Findlaw and Buy & Hold. From that, I learned that I'm OK but need to keep and eye on these guys along with any changes in securities law.

So I've researched investing, have a basic understanding of securities law and have spoken to financial planners. Not once I did I go to the SEC for advice and I feel comfortable with my decisions. The SEC, at one time, was considered to be the best source for investing but it was never the only one.

As I said before, he SEC need to take a big chunk of the blame for this but Madoff investors need to take some of it as well...maybe not all of it but at least some. If you did your due diligence as Ms. Ambrosino did, then I believe you. But remember that very few people go to the SEC for investment advice. And many of the people that don't won't get ripped off by an investment advisor.

Ms. Ambrosino's position is contrary to the law and is transparently self-serving. Essentially, she wants a third party, the SIPC, to pump more money into the Ponzi. At the same time, she opposes clawbacks of funds taken out of the the Ponzi. Effectively, her position is that whatever went out the door should stay out the door, and the Ponzi should be sustained for one last cash infusion - by the SIPC - before it is allowed to end.

That would make all the other insureds of the SIPC as well as the entities that fund the SIPC the final victims of the Ponzi. All this in order for Ms. Ambrosino to garner more money for herself on top of all the money she has withdrawn to enjoy her years of trotting around the country in a luxury mobile home. Sorry, but that is not a moral position. And it is completely in conflict with a ruling of the US Court of Appeals for the Second Circuit.

Ms. Halio: I do not believe for one moment that you reviewed the SEC's findings on Madoff when you invested. That is just a convenient excuse to try to get the government to bail you out of the mess you got yourself into. But if you had looked to the SEC, you would know that they do not "endorse" any investment. They don't approve or disapprove of investments. They don't even affirmatively certify that an entity is honest or fraud-free. All they did was say that they found no evidence to support the allegations against Madoff. Obviously, that conclusion was wrong. But that did not give you or anyone else the right to deem the SEC as your personal investment advisor. If you didn't know that then, you know it now.

BTW, you might have picked up the newspaper and checked to see if the securities listed on Madoff's statements actually traded in the price ranges indicated on the statements. But I guess you were so busy reviewing the SEC's findings that you didn't have the 2 minutes it would have taken to check the trade prices in the Wall St. Journal.