On Wednesday, three investors hit by Bernard Madoff’s Ponzi scheme filed a lawsuit in federal court in Newark against the president and directors of the Securities Investor Protection Corporation. The investors accuse SIPC of fraud and failing to reimburse harmed investors as much as $500,000 each, according to DealBook. The investors have filed the case as a putative class action.
Specifically, the plaintiffs challenge SIPC’s and trustee Irving Picard’s policy that investors may claim only cash deposits minus withdrawals, not the amount reflected in the final bogus account statements Madoff’s firm issued prior to his arest in December 2008.
DealBook reports that the president and chief director of SIPC, Stephen P. Harbeck, is accused of fraud, bad-faith failure to pay insurance claims and violations of the New Jersey Consumer Fraud Act. Harbeck issued a statement that certain lawyers were exploiting the victims in this case by directing anger at SIPC.
