Irving Picard is a man on a mission. 

And for the most part, people have cheered the zeal with which the court-appointed trustee, tasked with recovering assets from the epic Bernard Madoff Ponzi Scheme, has approached his job. But it has turned into quite a business for him, as he is single-handedly powering growth of this law firm Baker Hostetler. We've noted that Picard has generated roughly $100 million in fees for his firm, a figure that will surely go higher. 

But all of this is not cheap. Someone has to pay. And that would be the Securities Investor Protection Corporation, which essentially insures brokerage accounts. It has spent at least $228.3 million, not counting restitution payments. The New York Times notes SIPC estimates it will spend a further $1.1 billion on the case. "That is equal to the entire annual budget of the Securities and Exchange Commission." 

What's more, the fraud "is costing more than the total of all the other cases SIPC has handled in its 40 years of existence. ... Before this happened, SIPC thought it was fully funded, and charged brokerage firms only $150 a year. Now it charges them a quarter percent of net revenue--bringing in more than $400 million a year--and it is likely to keep doing that until it has $2.5 billion on hand. At last report, it had $1.2 billion, slightly more than the amount it expects to spend on the Madoff case in coming years." 

This is starting to look like big business unto itself, a bit like the Lehman Brothers bankruptcy wind down. At some point, you have to ask when does it all end.

Picard seems well on his way to recovering the $20 million in principal lost directly in the Ponzi Scheme. He may do that relatively soon, given the sort of deals he has struck. But he also has vowed not to stop until he recovers all of the ill-gotten gains that were generated by the fraud, which totals more than $100 billion. People are now talking about giving victims an actual return on their investment. Aggrieved net winners, who are struggling to pay back funds, might also be let off the hook. 

My sense is that Picard will keep on keeping on until the SIPC cuts him off. 

Until then, there could well be some excitement. Many are waiting to see how Picard resolves his suit against JPMorgan Chase. The bank has just requested the matter be moved out of bankruptcy court and be given a jury trial. That would be very interesting, as it raises the possibility that Madoff himself might appear. But my sense is still that the bank will settle. - Jim