New Legislation May Increase Protections for Ponzi Scheme Victims

Victims of Bernard Madoff's scheme and other Ponzi scheme victims may be interested to hear that US Representative Gary Ackerman has introduced legislation that may provide assistance and expand protections to investors. The Ponzi Scheme Investor Protection Act of 2011 reforms the Securities Investor Protection corporation (SIPC) that Congress previously created to help investors recover assets from failed brokerage firms.

The new legislation introduced by Ackerman would:

• Restrict the ability of the SIPC to take back funds from innocent victims.
• Expand how many Ponzi scheme victims are eligible for insurance provided by SIPC. Currently, only direct investors are eligible and, by accepting the insurance payment, investors waive their right to sue.
• Increase accountability of SIPC-appointed trustees. This would allow an annual audit of the trustee when involved in a liquidation in which they may be unable to recoup the advances paid to investors. This also allows for better oversight of the trustee's compensation.
• Credit victims based on a "net equity" evaluation, which takes into account the general rise in consumer prices over time.
• Allow for more timely and equitable consideration of claims. The SIPC would have to submit a timeline within 30 days of the discovery of a Ponzi scheme worth more than $1 billion. If they do not stick to the timeline, it would be possible for victims to receive payments with interest.
• Apply retroactively to victims of Ponzi schemes with investments of more than $1 billion.

Ackerman expressed concern that many of Bernard Madoff's victims are still "in limbo" 2 ½ years after the discovery of the Ponzi scheme. He stated that this legislation could "go a long way towards finally providing the relief that the innocent victims of Bernard Madoff and other Ponzi scheme swindlers deserve."

If you have been the victim of a Ponzi scheme and have yet to recover your losses, schedule a free consultation at 1-866-8-BROKER (866-827-6537) with one of the securities fraud attorneys with the law firm of Meyer Wilson. We are experienced FINRA lawyers who have recovered millions of dollars for our clients through stockbroker mediation, arbitration, and litigation. We also offer a FREE book Five Signs of Investment Fraud... And What to Do if it's Happened to You.