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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: anniebonny who wrote (105788)	1/16/2009 12:38:08 PM
From: scion	Respond to of 122087

Madoff investors may have to pay back money spent BY JAMES BERNSTEIN \| james.bernstein@newsday.com January 16, 2009 newsday.com If you invested money with accused swindler Bernard Madoff, and then in the past few years made withdrawals, you could, according to federal law, be required to give that money back in what is known as a "claw back." That possibility is terrifying investors, who may also have left some of their money with Madoff, only to find out that it is now gone, bankruptcy lawyers said. The Securities Investor Protection Corp., which maintains a reserve fund authorized by Congress to help investors at failed brokerage firms, and Irving Picard, the court-appointed trustee for the liquidation of Bernard L. Madoff Investment Securities Llc of Manhattan, have not yet said how they will divide Madoff's assets or decide how much money, if any, they will "claw back" from investors who took withdrawals. But there is a likelihood such investors will be asked to return money, some bankruptcy attorneys said. While no decision has been made, SIPC would be looking to dispense Madoff's assets equitably among investors, according to Stephen Harbeck, SIPC's chief executive. Those who made money through withdrawals might be required to pony up some cash to those who did not and whose money is gone, several bankruptcy lawyers said. Those who took withdrawals believed they were taking profits, when actually, according to the government, it was money from other clients in an alleged $50-billion Ponzi scheme. Madoff was arrested on one count of securities fraud Dec. 11. He has not been charged and is under house arrest in his Manhattan apartment. SIPC chief executive Stephen Harbeck could not say Madoff investors were "dead wrong" to think there would never be any claw back. Last week, SIPC wrote to about 8,000 former Madoff clients inviting them to apply for aid. "What I can tell them is SIPC will act rationally and do whatever the law states," Harbeck said. "We are working on how to do the greatest good for the greatest number within the law." The Madoff case trustee might rely on a 2005 case when a hedge fund run by Bayou Group collapsed. It was later found to be a fraud, and trustees in the case asked a court to force investors to return false profits. Authorities seized more than $100 million after the collapse, but as of June, it had not yet been distributed to victims. Meanwhile, bankruptcy attorneys say they are getting frantic calls from their clients. "The types of calls I'm getting are from investors who had kids in college and pulled money out to pay for tuition, or from people who had a relative in a nursing home and pulled out money to pay for it," said Steven B. Caruso, a Manhattan attorney specializing in securities. That these investors may be required to return money is not fair, Caruso said, particularly since they were unaware that their money was being used in an alleged scheme. Many Madoff investors didn't even know their money was invested with Madoff because they dealt with "feeder firms" who dealt with him. In such cases, attorneys said, the trustee might go after the firms, which, in turn, might come after the individual investors. But Marvin Pickholz, of Duane Morris Llp in Manhattan, a corporate bankruptcy and securities firm, said matters might not be as simple as SIPC demanding back money. "To my mind, this is like pushing peas around from one side of the plate to the other," Pickholz said. "If it's proven this is all a fraud, people are going to amend their tax returns and say they want their money back." newsday.com