SIPC to liquidate Madoff's firm

The US investor protection authority has announced to liquidate the brokerage firm of Wall Street trader Bernard L Madoff, who was arrested for alleged $50 bn fraud.     

The Securities Investor Protection Corporation (SIPC), which maintains a special reserve fund authorised by Congress to help investors at failed brokerage firms, would liquidate Bernard L Madoff Investment Securities LLC of New York, under the Securities Investor Protection Act (SIPA), a statement said.     

"Upon information provided by the Securities and Exchange Commission and Financial Industry Regulatory Authority, it is clear the customers of Madoff firm need protections available under federal law... SIPC and the trustee are dedicated to returning assets to customers as promptly as possible," SIPC President and CEO Stephen Harbeck said.     

SIPC today filed an application with the US District Court for the Southern District of New York for a declaration that the customers of Bernard L Madoff Investment Securities LLC are in need of the protections available under the SIPA.     

The district court has granted the application and appointed Irving H Picard as trustee for the liquidation of the brokerage firm and appointed law firm of Baker & Hostetler LLP as counsel to Picard, the statement added.     

However, Harbeck cautioned that, "it is unlikely that SIPC and the Trustee will be able to transfer the customer accounts of the firm to a solvent brokerage firm. The state of the firm's records may preclude a transfer of customer accounts."