On Friday, a group of legislators introduced a bill that could change how the Securities Investor Protection Corp. collects illegally obtained funds to return to Ponzi scheme victims.
Following criticism of SIPC for trying to “claw back” ill-gotten gains from investors who profited from Bernard Madoff’s Ponzi scheme (in order to redistribute the funds to investors who lost money), US Reps. Gary Ackerman, Peter King and four other Congressmen have presented a bill that would bar such claw backs. The bill would retroactively allow hundreds of Madoff victims to resist SIPC’s efforts to recover their profits, the New York Post reports.
The bill would also require SIPC to provide up to $100,000 in insurance coverage to investors who invest in Ponzi schemes indirectly, such as through funds of hedge funds. Currently, SIPC insurance covers up to $500,000 for investors who invested directly in a scheme.
Read the New York Post article
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