RECOVERIES AND SETTLEMENT AGREEMENTS
$11.219 Billion

CUSTOMER FUND, including required reserves
$2.185 Billion

AMOUNT DISTRIBUTED FROM CUSTOMER FUND
$8.801 Billion

SIPC COMMITTED FUNDS SUBJECT TO SUBROGATION*
$665.8 Million

AMOUNT UNAVAILABLE DUE TO APPEALS AND RESERVES
$232.1 Million

DISTRIBUTIONS

- Seventh Pro Rata Interim Distribution
- Sixth Pro Rata Interim Distribution
- Fifth Pro Rata Interim Distribution
- Fourth Pro Rata Interim Distribution
- Third Pro Rata Interim Distribution
- Second Pro Rata Interim Distribution
- First Pro Rata Interim Distribution
- Interim Distribution Calculation
- Required Reserves
- Advances Reimbursed to SIPC on Fully Satisfied Accounts
- Claims Calculations - Example One
- Claims Calculations - Example Two

Seventh Pro Rata Interim Distribution

On June 30, 2016, the seventh pro rata interim distribution of recoveries from the Customer Fund to eligible BLMIS customers commenced after the United States Bankruptcy Court for the Southern District of New York approved the SIPA Trustee’s allocation and distribution motion on June 15, 2016.

As of September 16, 2016, the SIPA Trustee has distributed approximately $190.2 million on a pro rata basis to BLMIS account holders with allowed claims. The seventh distribution represents 1.305 percent of each claim dollar and will be paid on claims relating to 972 BLMIS accounts, to record holders of allowed claims as of June 15, 2016. The average payment for an allowed claim issued in the seventh distribution will total $195,727.68. The smallest payment totals $136.69 and the largest payment is $31,942,323.51. In addition, SIPC will be reimbursed for its advances to accounts that the seventh interim distribution has fully satisfied. All allowed claims totaling $1,200,024.90 or less will be fully satisfied after the distribution.

Sixth Pro Rata Interim Distribution

The sixth pro rata interim distribution from the Bernard L. Madoff Investment Securities LLC (BLMIS) Customer Fund to eligible customers commenced on December 4, 2015. As of September 16, 2016, approximately $1.209 billion has been distributed to BLMIS account holders with allowed claims in the sixth distribution, representing approximately 8.262 percent of the allowed claim amount of each account, unless the claim is fully satisfied.

Fifth Pro Rata Interim Distribution

The fifth pro rata interim distribution from the Bernard L. Madoff Investment Securities LLC (BLMIS) Customer Fund to eligible customers commenced on February 6, 2015. As of September 16, 2016, approximately $403.4 million has been distributed to BLMIS account holders with allowed claims in the fifth distribution, representing approximately 2.743 percent of the allowed claim amount of each individual account, unless the claim is fully satisfied. 

Fourth Pro Rata Interim Distribution

The fourth pro rata interim distribution from the Bernard L. Madoff Investment Securities LLC (BLMIS) Customer Fund to eligible customers commenced on May 5, 2014. As of September 16, 2016, approximately $468.2 million has been distributed to BLMIS accountholders with allowed claims in the fourth distribution, representing approximately 3.180 percent of the allowed claim amount of each individual account, unless the claim is fully satisfied. 

Third Pro Rata Interim Distribution

The third pro rata interim distribution from the Bernard L. Madoff Investment Securities LLC (BLMIS) Customer Fund to eligible customers commenced March 29, 2013. As of September 16, 2016, approximately $696.3 million has been distributed to BLMIS accounts with allowed claims in the third distribution, representing approximately 4.721 percent of the allowed claim amount of each individual account, unless the claim is fully satisfied. 

Second Pro Rata Interim Distribution

As of September 16, 2016, distributions from the BLMIS Customer Fund via the second pro rata interim distribution to BLMIS customers whose claims have been allowed by the SIPA Trustee totaled $4.978 billion, representing approximately 33.556 percent of the allowed claim amount of each individual account, unless the claim is fully satisfied. The second pro rata interim distribution commenced on September 19, 2012, based on August 22, 2012 approval by the United States Bankruptcy Court for the Southern District of New York.

First Pro Rata Interim Distribution

As of September 16, 2016, distributions from the BLMIS Customer Fund via the first pro rata interim distribution to BLMIS customers whose claims have been allowed by the SIPA Trustee totaled $685.3 million, representing approximately 4.602 percent of the allowed claim amount of each individual account, unless the claim is fully satisfied. The first pro rata interim distribution commenced on October 5, 2011, based on July 12, 2011 approval by the United States Bankruptcy Court for the Southern District of New York.

Interim Distribution Calculation

To make interim distributions from the BLMIS Customer Fund, the SIPA Trustee must determine or estimate both the total value of customer property available for distribution (including reserves for disputed recoveries) and the total net equity of all allowed claims (including reserves for disputed claims).

There are unresolved issues that require maintenance of substantial reserves with respect to both the customer property “numerator” and the net equity claims “denominator.” This includes the expected increase of several billion dollars in the value of allowed claims due to the 71 additional claims that have been deemed determined by the SIPA Trustee pending the outcome of litigation, the time value of money and appeals of other settlements.

Nevertheless, even when taking reserves into account, it is possible for the SIPA Trustee, on an interim basis, to determine the (a) allocation of property to the BLMIS Customer Fund or the “numerator”; (b) amount of allowable net equity claims or the “denominator”; and (c) calculation of each allowed claimant’s minimum pro rata share of the Customer Fund.

The equation is as follows:

 

For the purposes of interim distributions, the SIPA Trustee’s calculations must take into consideration all unresolved issues and establish sufficient reserves to ensure that he would be able to make a pro rata distribution to all potentially eligible claimants, whether or not their claims are allowed at the time of distribution.

There are two primary reasons why significant funds are not available for distribution at this time: required reserves and ongoing appeals.

Required BLMIS Customer Fund Reserves for Deemed Determined Claims

As of September 16, 2016, while there are 2,597 allowed claims and the dollar amount of allowed claims is approximately $15.080 billion, both the number of allowed claims and the dollar amount will increase over time. There remain 71 claims, which have been "deemed determined" by the SIPA Trustee, but their status as "allowed" claims is not yet final, pending the outcome of ongoing litigation. If allowed, these claims would become eligible for all pro rata distributions to date. For this potential scenario, the SIPA Trustee must set aside a reserve for the seven interim distributions of 58.369 percent of potential payments, and has therefore to date reserved approximately $1.934 billion. The ultimate amount of additional allowed claims depends on the outcome of litigation or negotiation and could add billions of dollars to the total amount of allowed claims.

General Reserve

As of September 16, 2016, the general reserve is $200 million.

Other Customer Fund Required Reserves

As of September 16, 2016, other reserves, including reserve for deferred payments and unallocated funds: approximately $51 million.

Amount Unavailable to the BLMIS Customer Fund Due to Required Reserves and Appeals

Portions of recoveries related to certain settlement agreements must be held in reserve due to appeals and other issues. These funds cannot be either allocated to the Customer Fund or distributed to BLMIS customers with allowed claims until these issues are resolved. As of September 16, 2016, approximately $232.1 million relating to settlement reserves and other matters must be held in reserve.

Advances Reimbursed to SIPC on Fully Satisfied Accounts

In the Bernard L. Madoff Investment Securities LLC (BLMIS) liquidation, the Securities Investor Protection Corporation (SIPC) has made cash advances – up to a maximum of $500,000 per allowed claim – available to the court-appointed Securities Investor Protection Act (SIPA) Trustee to distribute to eligible customers, as a way to expedite financial relief to these customers. As of September 16, 2016, SIPC advances for this purpose have reached a total of approximately $836.6 million. The total of SIPC-committed advances will continue to increase as claims that are currently in litigation are allowed as a result of settlements or the conclusion of litigation.

According to the provisions of SIPA, SIPC is reimbursed for its advances to customers once each respective customer claim is fully satisfied. As of the seventh pro rata interim distribution in the BLMIS liquidation proceeding, SIPC received $170.8 million in reimbursement from the Customer Fund for advances paid on fully satisfied accounts.

Reimbursement payments to SIPC are calculated as follows:

On a claim that has been allowed in the amount of $1,200,024:

In another example, if a claim were allowed in the amount of $3 million, distributions to date would be as follows: