Attorneys Representing Maddoff Victims
MILESTONES FOR MADOFF VICTIMS
- On March 3, 2011, Barry Lax appeared before the United States Court of Appeals for the Second Circuit to argue that Judge Lifland's decision should be overturned, as the court inaccurately decided the definition of "Net Equity" under the Securities Investor Protection Act ("SIPA"). A copy of the Net Equity hearing transcripts can be found here.
- Lax & Neville LLP filed a Class Action adversarial proceeding in Bankruptcy Court seeking to obtain a declaratory judgment that a customer's "net equity" under the Securities Investor Protection Act is the value of the securities reflected in the customer's November 30, 2008 Madoff account statement as opposed to the Trustees unlawful definition of "net equity" of "money in-money out." This action, in part, led to the Trustee's decision to file a motion addressing the "net equity" issue. Both Brian Neville and Barry Lax worked with the Trustee's counsel to frame the issue for the motion, which is now before the Bankruptcy Court.
- Lax & Neville LLP is the only firm that is purporting to represent and seek restitution for the approximate 500 Madoff victims who did not file SIPC Customer Claim Forms with the Trustee by the July 2, 2009 deadline because of fear of "claw back" suits by the Trustee.
- Lax & Neville LLP is one of two law firms directly responsible for the launching of the Trustee's Hardship Program created for the benefit of Madoff victims suffering extraordinary financial hardship to accelerate payments from SIPC.
- Lax & Neville LLP played an instrumental role in the Trustee's decision to pay Madoff victims without requiring the victims to waive their right to seek additional funds under the lawful definition of "net equity." Both Brain Neville and Barry Lax worked with the Trustee's counsel to create this new policy, and even suggested the language used in the new determination letters issued by the Trustee.
Lax & Neville LLP will be initiating litigation against the Securities and Exchange Commission ("SEC") on behalf of Madoff victims seeking monetary damages for negligence under the Federal Tort Claims Act. Based upon the Inspector General's Report, we believe that a viable claim exists against the SEC. Please see link below.
Inspector General's Report Regarding SEC Investigation of Madoff
If you have any questions regarding this matter, please contact our firm at (212) 696-1999.
On June 5, 2009, our firm filed a class action adversarial proceeding in the United States Bankruptcy Court for the Southern District of New York seeking to obtain a declaratory judgment, pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. § 2201, et seq., (i) that the Trustee's definition of "net equity" is incorrect as a matter of law, and (ii) that a customer's "net equity" under SIPA is the value of the securities reflected in the customer's Madoff account as of the SIPA filing date (even where the securities were never actually purchased) less any amounts the customer owes to Madoff.
First and foremost, the Trustee/SIPC Approach is an unlawful contravention of SIPA that deprives innocent victims of their SIPC recovery. It is also unprecedented. We are aware of no case in the history of SIPA where customers, who have been provided with written confirmations and account statements reflecting purchases and holdings of real securities (e.g., IBM, AT&T, etc.), had their "net equity" claims determined on the basis of the cash in, cash out approach being used by the Trustee and SIPC in this case. Indeed, in January of this year, SIPC President Stephen Harbeck acknowledged that, for this one case, SIPC took the extraordinary step of modifying the standard SIPC claim form used over the past 39 years. That form, which simply asks for the information required under the SIPA Definition (namely, what the debtor owes the customer and what the customer owes the debtor as of the filing date), was changed to ask for the customer's total deposits and total withdrawals (for what could be decades). Neither the Trustee nor SIPC has set forth any statutory basis for this departure from the SIPA Definition of "net equity" and past practice, and there is none.
Second, these adversely affected investors are not seeking a bail out from the government. SIPC was designed essentially as an insurance policy for investors defrauded by broker/dealers. The funding associated with these duly authorized SIPC payouts would come from SIPC funds, which are comprised of the yearly registration fee paid in by registered broker/dealers. Just recently, SIPC reviewed and increased its membership due's formula and has authorized increased contributions. Broker/Dealer registration in SIPC is voluntary, and contrary to the assertion made in the Times article, there are excellent alternatives other than taxpayers footing the bill for these payouts. SIPC could borrow the funds, increase membership dues, and seek retroactive contributions from its members.
In sum, this class action seeks a declaration by the Court on the definition of "net equity." We feel that our position is strongly supported by the law, and is supported by the policy arguments originally offered when SIPA was enacted.
If you have any questions regarding these matters, please contact either myself or partners Barry Lax and Brian Neville at (212) 696-1999.
Madoff Class Action Adv. Pro. No. 09-1265(BRL)
Letter to SEC regarding SIPC Claims
Lax & Neville is currently acting on behalf of a group of approximately 300 investors called MadoffSurvivors, and represents many of its members. Brian Neville has been selected to head the legal steering committee, and is currently forming a legal strategy session for all attorneys involved, as well as congressional members who may help. The MadoffSurvivors exemplify the true victims of the Madoff ponzi scheme. They are individuals and families who worked their lifetimes to attain a modest nest egg for their retirement that was abruptly stolen from them on December 11, 2008.
If you are a victim of this fraud, and invested directly with Bernard L. Madoff Investment Securities LLC, and would like to retain Lax & Neville LLP to file a SIPC Claim on your behalf, please call Lax & Neville LLP, (212) 696-1999.