WASHINGTON (Reuters) - The trustee overseeing the liquidation of accused swindler Bernard Madoff’s assets is poring over hundreds of claims from Madoff’s clients and has started classifying them, the president of the agency charged with helping clients of failed brokerages said on Friday.
“The trustee has started to receive claims. I think there are a couple of hundred in. He is beginning to classify them,” said Stephen Harbeck, president of the Securities Investor Protection Corp.
“Trustee staff are looking at individual claims. For example, are there people who have never withdrawn money? Those claims might be the easiest to resolve,” he said.
SIPC, which was set up by Congress in 1970 to maintain a fund to help investors who had accounts at brokerage firms that failed, mailed out more than 8,000 claim forms to Madoff’s clients earlier in January.
The nonprofit agency along with Madoff’s trustee and the U.S. Securities and Exchange Commission are trying to hash out a plan to help the defrauded investors.
SIPC has never confronted a scandal along these levels. Its reserve fund, which is supported by broker-dealer assessment fees, has $1.6 billion. That is a fraction of Madoff’s purported fraud. The agency also has a $1 billion line of credit with the U.S. Treasury Department.
SIPC may be forced to ask Madoff clients to return some money it received from Madoff so SIPC can distribute funds to other defrauded investors.
Harbeck said staff from SIPC and the SEC have met to figure out the best way to settle claims but a formal decision has not been made yet. “Settling claims in a Ponzi scheme that has gone on for 30 years is unprecedented,” he said.
“I assume that some time within the fairly near future, the trustee, SIPC and the SEC will agree on a methodology as to how we are going to help these people under the law,” said Harbeck.
SIPC’s board is due to meet next week. It is expected to consider whether to raise the assessment fee it charges broker-dealers and whether it will need to ask Congress for additional funds.
Reporting by Rachelle Younglai, editing by Matthew Lewis