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SIPC Disappointment Down the Road for Madoff Investors

By Mark H. Astarita, Esq.

There is such a fundamental misunderstanding of SIPC in the investor community that it is sometimes frightening. SIPC is not a Congressional bailout for investors who lost money. It is not insurance. Its sole function is to protect investors if a brokerage firm goes out of business due to bankruptcy or other financial difficulties and customer assets are missing.SIPC's role is to return the customer's cash and securities to them from the failed firm. That's all it is. SIPC will get you back your cash (up to $100,000) and will replace your missing securities (up to $500,000).SIPC is NOT an insurance company, and it does NOT cover an investor's losses that were caused by fraud on the part of the broker dealer.And that leaves Madoff's investors in the lurch...continue to full post

Full post as published by SECLaw.com on December 29, 2008 (boomark / email).