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Rep. Steve Garrett Re-Introduces Bill to Protect Madoff Investors

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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.”

If the current law is not followed, Garrett said, “No customer can ever have confidence in his or her dealings with a broker. That is contrary to the policy goal of encouraging investment, which is critical to the economic revival our country needs.”

Garrett, who’s been particularly critical of the Securities and Exchange Commission’s (SEC) failure to catch the Madoff scheme, plans to hold a hearing on the SEC’s budget on March 10. Garrett has been vocal in his opposition to awarding the SEC more funds.

The House Financial Services Committee’s March hearings agenda is as follows:

Tuesday, March 1:

  • Full Committee hearing on GSE Reform at 10 am
  • Full Committee hearing on the FY 2012 HUD Budget at 2 pm          

Wednesday, March 2:

  • Full Committee hearing to receive the Monetary Policy Report to the Congress required under the Humphrey-Hawkins Act at 10 am
  • Financial Institutions Subcommittee hearing on the impact of the Dodd-Frank Act on community banks at 2 pm

Thursday, March 3:

  • Full Committee mark up of bills to be determined at 10 am

Wednesday, March 9:

  • International Monetary Policy Subcommittee hearing on the Export-Import Bank at 10 am
  • Insurance, Housing and Community Opportunity Subcommittee hearing on reauthorization of the National Flood Insurance Program at 2 pm

Thursday, March 10:

  • Capital Markets Subcommittee hearing on the SEC’s budget at 10 am

Friday, March 11:

  • Capital Markets Subcommittee hearing on covered bonds at 10 am

Tuesday, March 15:

  • Full Committee mark up of Budget Views and Estimates at 10 am

Wednesday, March 16:

  • Capital Markets Subcommittee hearing on the Risk Retention Securitization Rule at 10 am
  • Financial Institutions Subcommittee hearing on oversight of the Consumer Financial Protection Bureau at 2 pm

Thursday, March 17:

  • Domestic Monetary Policy Subcommittee hearing on monetary policy and rising prices at 10 am

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