Rep. Scott Garrett, R.N.J., chairman of the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises reintroduced legislation, H.R. 757, on Thursday to protect investors defrauded by the Bernie Madoff Ponzi scheme. Garrett first introduced the bill during the last Congress.
Garrett said in a statement that the bill, the Equitable Treatment of Investors Act, reaffirms and clarifies “key protections for ordinary investors that were put in place when Congress passed and amended the Securities Investor Protection Act (SIPA).” In particular, he said, “the bill aims to properly shield innocent individual investors who have already been defrauded and financially devastated by Bernie Madoff from further ‘clawbacks’ by the Securities Investor Protection Corp. (SIPC) Trustee.”
For the purposes of SIPC protection, Garrett said his bill clarified that “customers of registered brokers are legally entitled to rely on their customer statements as evidence of what their broker owes them. Indeed, in a world where customers do not hold physical securities, it could not be any other way.”
Garrett went on to say that he’s “increasingly concerned that the trustee in the Madoff case is ignoring the law and failing to provide prompt assistance to those who have been thrust into financial chaos.” The trustee, he continued, is taking positions on a wide range of issues that are contrary to SIPA, the Bankruptcy Code, and federal and state laws that are intended to protect investors against bad acts on the part of their brokers. This legislation is intended to clarify congressional intent in these areas.”