Bernie, the SEC, the SIPC and Me: One Customer’s Story
November 2, 2009
Ronnie Sue Ambrosino never imagined she’d be just as infuriated with the Securities and Exchange Commission (SEC) and Securities Investment Protection Corp. (SiPC) as she is with the man who stole her retirement savings, Bernie Madoff.
“I believe that the SEC is totally at fault. It was as if [Madoff] was given the red carpet to rob you and the government gave [Madoff] the gun. If I did my job the way the SEC did theirs, I would not have a job,” said Ambrosino, who is the coordinator for Bernard Madoff Victims Coalition, an online group of 400 Madoff investors trying to educate themselves about the system and to present united front on how restitution is determined.
The SiPC is set up to step in when a brokerage fails and reimburse investors for losses suffered. Ambrosino disagrees with its contention that each victim should be paid whatever deposits they made to Madoff over the years minus their withdrawals.
Ambrosino maintains the SiPC is legally bound to pay back investors on the basis of the value in their accounts as of Nov. 30, 2008 when the last statements were sent out by Madoff.
The reimbursement, she contends, should be up to the SiPC maximum protection limit of $500,000. Ambrosino said that $500,000 would reimburse her for “well under half’’ what she lost.
Court-appointed trustee Irving Picard, working under the aegis of the SiPC, in a declaration filed Oct. 16 used the testimony of accounting forensics expert Joseph Looby to argue that the Nov. 30, 2008 statements were largely fiction given that none of the investments in them were ever bought or sold.
“It is impossible to trace a customer’s money to specific trades,” Looby wrote.
Picard’s argument would appear to be that there are no “missing” securities to recover and from which to firmly establish victims’ losses.
With Madoff, the securities were not stolen or “missing” per se because they never existed in the accounts of Madoff’s victims, according to Looby. On the other hand, the SiPC by statute protects victims of “failed brokerage firms…to return customers’ cash, stock and other securities.” If ever there was a “failed brokerage firm,” it is Bernard L. Madoff Investment Services, Ambrosino contends.
However, Picard, speaking in a press conference on Oct. 28, said the SiPC would have the resources to pay off victims at the maximum if the U.S. Bankruptcy Court for the Southern District of New York agrees with Ambrosino.
“It would not have an effect on those who have received this maximum [$500,000]. People who have received less would then be a different position. Even if that would be the case, the SiPC resources are sufficient to deal with (this) case.”
Meanwhile, Ambrosino, 56, still has a hard time believing such misfortune has befallen her even with the first anniversary of Madoff’s arrest now only weeks away. She is from New York and Florida, but is stuck in a motor home ironically enough in Surprise, Ariz., where she was first learned the bad news on Dec. 11, 2008.
“We were just passing through, but this is where we remain waiting for the SiPC to pay me the $500,000 it owes me. It won’t bring me closure, but will give me a sense that I if break a bone, I will be able to take care of it,” she said.
