Social Security IS the biggest Ponzi scheme ever in the United States.
Posted on 12/15/2008 4:35:43 PM PST by Sub-Driver
Madoff Investors May Be Protected By Government
Reporting John Slattery NEW YORK (CBS) ― Federal investigators remain at the investment offices of disgraced investor Bernard Madoff, scouring through records to learn the scope of what may be the biggest Ponzi scheme ever in the United States.
The numbers are staggering, the losses far-reaching.
The scheme was operated out of the so-called "Lipstick Building" on Third Avenue. Bernard Madoff Investment Securities LLC occupies three floors and may have bilked investors of $50 billion.
Prosecutors say it was a classic Ponzi scheme. The firm paid-off earlier investors with money from new investors. It collapsed amid a nervous economy when some people wanted their money out.
"I believe he was a polished, polished, highly sophisticated schemester," said investors' attorney Mark Mulholland.
Mulholland's Long Island firm represents some 100 investors that could grow to several hundred who claim they lost millions.
"University endowments, pension funds; the scope seems to be limitless and affects little people too," says Mulholland.
In addition to publisher Mort Zuckerman; Fred Wilpon, owner of the Mets; former Philadelphia Eagles owner Norman Braman; there were the modest investors who put their faith in Madoff.
"We lost our life savings," said investor Joan Sinkin.
Brooklyn transplants to Florida, Sinkin and her husband Arnold said they lost 85-percent of a nearly $1 million investment.
"We were able to do things to enhance our retirement. Then in 72 hours, we were bankrupt," she said.
(Excerpt) Read more at wcbstv.com ...
Since it’s a criminal act how can the gov’t bail these people out?
So if I lost a bundle at the local casino I can ask for a bailout? Both are gambles, right?
I heard that it is but a pittance. I think 1.5 billion (but maybe 15) and not nearly enough to help.
Source? Rush or Fox
The US government runs the biggest Ponzi sceme in the history of the world.
It’s called Social Security, and one day it will end up costing taxpayers far more than $50 billion.
All the jokes about a bailout vindicated.
“Since it’s a criminal act how can the gov’t bail these people out?”
The moneyed, left wing elite always get a do over.
He must be refering to the Palm Beach crowd. /s
Social Security IS the biggest Ponzi scheme ever in the United States.
Gee...Just a short month ago that would've sounded like a lot of money.
Now after our $750 Billion taxpayer funded banker bailout, and our impending $100B+ taxpayer funded UAW bailout ... this $50 billion seems like a mere 'pittance'...
Excuse me while I head out to the vomitorium...
http://www.sipc.org/who/notfdic.cfm
Why We Are NOT the FDIC
“Insurance” for investment fraud does not exist in the U.S. The Federal Trade Commission, Federal Bureau of Investigation, state securities regulators and other experts have estimated that investment fraud in the U.S. ranges from $10-$40 billion a year. In the case of microcap stock fraud, the toll on investors has been estimated as $1-3 billion annually.
With a reserve of slightly more than $1 billion, SIPC could not keep its doors open for long if its purpose was to compensate all victims in the event of loss due to investment fraud.
It is important to understand that SIPC is not the securities world equivalent of FDIC–the Federal Deposit Insurance Corporation. Congress specifically considered creating a Federal Broker-Dealer Insurance Corporation, but lawmakers wisely concluded that such a designation would be both misleading and out of step in the risk-based investment marketplace that is so different from the world of banking
This will all come to a head soon folks. Get your debts down (I know, that seems counterintuitive these days) and buy some gold (in case of inflation), canned goods (alcohol and smokes, if you need them) and some “protection”. The music is about to stop and there aren’t any chairs left.
SIPC doesn't guarantee investment returns on safety of the asset itself in the event of a firm's failure.
Financial "journalism" has never looked so amatuerish.
Please fix title - need one bracket added
Frankly, I am running out of bubble-gum.
Can I get it back from the taxpayer too?
More here:
http://newsgroups.derkeiler.com/Archive/Misc/misc.invest.stocks/2008-12/msg00877.html
Is my account covered?
That depends. If you have a brokerage account with Mr. Madoff’s
securities firm, then you may have some protections under the
Securities Investor Protection Corp., the industry-funded nonprofit
membership corporation that steps in when a brokerage firm fails. If
your accounts are with Mr. Madoff’s investment-advisory business, then
you’re probably out of luck since those accounts won’t qualify for
SIPC coverage.
What does SIPC cover?
SIPC covers losses that are related to theft and proven unauthorized
trading. Incidents of fraud, churning or manipulation of stock prices
don’t qualify. Ordinary market losses, and some holdings, such as
currencies, hedge funds and limited partnerships not registered with
the SEC, also don’t qualify for SIPC coverage. If the firm doesn’t
have the funds and securities to repay any customer obligations in a
bankruptcy, then SIPC will step in to cover losses up to $500,000 per
account, including $100,000 for claims for cash.
Would SIPC coverage apply to “Ponzi schemes”?
It’s likely, say securities attorneys. “If it’s a true Ponzi scheme —
that is, if you take my money without my permission and give it to a
prior investor as a profit — then I would certainly categorize it as
a theft,” which should be covered under SIPC, says Robert Uhl, a
securities attorney in Beverly Hills, Calif.
Make that trillion.
SIPC covers $500,000 per account.
Limits of SIPC Coverage
SIPC is limited in the risks, amounts, and investments that it covers, as described below.
Market Risk Not Covered
SIPC does not protect against market risk, which is the risk inherent in a fluctuating market. It protects the value of the securities held by the broker-dealer as of the time that a SIPC trustee is appointed. Trustees are appointed through a SIPC-initiated court proceeding to supervise the liquidation of a SIPC member that is insolvent or cannot return customer cash or securities.
An example shows this risk: A broker is shut down owing a customer 100 shares of ABC stock that was worth $50 a share, for a total value of $5,000. Five months later when the SIPC trustee is appointed, the stock has dropped to $30 a share. SIPC coverage would be limited to either replacing the 100 shares of ABC or the $3,000 in cash that the customer’s stock is worth at the time of the appointment of the trustee. Conversely, if the stock rose to $70 a share when the trustee was appointed, SIPC would either give the customer 100 shares of ABC stock or, if the shares are not available, would give the customer $7,000. In short, the fluctuation in the value of the shares represents the market risk that is not covered by SIPC.
Dollar Limitations
SIPC coverage is also limited to $500,000 per customer, including up to $100,000 for cash. For purposes of SIPC coverage, customers are persons who have securities or cash on deposit with a SIPC member for the purpose of, or as a result of, securities transactions. For example, if a customer has 1000 shares of XYZ stock valued at $200,000 and $10,000 cash in the account, both the security and the cash balance would be protected. SIPC does not protect customer funds placed with a broker-dealer just to earn interest. Insiders of the broker-dealer, such as its, owners, officers, partners, are not customers for SIPC coverage.
Protected Investments
Not all investments are protected by SIPC. In general, SIPC covers notes, stocks, bonds, mutual fund and other investment company shares, and other registered securities. It does not cover instruments such as unregistered investment contracts, unregistered limited partnerships, fixed annuity contracts, currency, and interests in gold, silver, or other commodity futures contracts or commodity options.
Did this outfit join the SPIC?
If not, then screw these folks....
Wake up! Human nature is pretty bad...even for residents of Miami.
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