More On Legal & Compliancefrom The Advisor's Professional Library
- Use and Misuse of Social Media Social media is an inexpensive and effective way to communicate with established and prospective clients. Nevertheless, when RIAs utilize social media to promote their advisory practices, they risk compliance problems for their firms.
- Disaster Recovery Plans and Succession Planning RIAs owe a fiduciary duty to clients to prepare for disasters and other contingencies. If an RIA does not have a disaster recovery plan, clients financial well-being may be jeopardized. RIAs should also engage in succession planning, ensuring a smooth transaction if an owner or principal leaves.
The Associated Press reported that U.S. Bankruptcy Judge Burton Lifland signed off on the Madoff settlement at the urging of a court-appointed trustee seeking to recover funds for thousands of investors burned by Madoff's epic Ponzi scheme.
"This is a unique and great day for customers of (Madoff's firm)," trustee attorney David Sheehan said Thursday at a hearing in federal bankruptcy court.
AP notes that lawyers representing a handful of former Madoff customers opposing the settlement signaled they would appeal — a move the judge warned could further harm wiped-out victims waiting to recover at least a portion of their life savings.
"You must take into account the effect of these delays," he said.
AP explains trustee Irving Picard and federal authorities reached the settlement last month with the estate of Jeffry Picower, a businessman and philanthropist who drowned in 2009 after suffering a heart attack in the swimming pool of his Palm Beach, Fla., mansion. Federal prosecutors have called the forfeiture the largest in Justice Department history.
Picard had sued Picower in a so-called clawback litigation, alleging his earnings from Madoff consisted of money stolen from other investors. However, Picower's widow, Barbara, has insisted he was in the dark about the fraud and he was never charged with a crime.
The $7.2 billion represents "every cent Picower ever received" from the fraud, Sheehan told the judge.
Sheehan said settlement negotiations were contentious and complicated by Picower's death. But in the end, he said, Barbara Picower did the right thing for the victims.
"She stepped up and stepped up big time," he said.
AP notes that Madoff, 72, is serving a 150-year prison term after admitting that for decades he used fraudulent account statements to trick investors into believing they had more than $60 billion invested in stocks. Investigators found, though, that no investments were made, and that an estimated $20 billion in principal was simply being paid out bit by bit to other investors.