Bernard L. Madoff’s Ponzi scheme is the largest fraud of its kind in U.S. history. The job undertaken by the court-appointed Securities Investor Protection Act (SIPA) Trustee in the substantively consolidated liquidation proceeding of Bernard L. Madoff Investment Securities LLC (BLMIS), under SIPA, is unprecedented.
Duties of the SIPA Trustee
The SIPA Trustee must identify and then recover assets, putting them in proper order as designated by law to maximize the amount available for distribution as customer property and for the benefit of general creditors. The SIPA Trustee files interim reports to the United States Bankruptcy Court for the Southern District of New York on his progress in recoveries, resolution of claims and other matters. The SIPA Trustee has a duty to conduct investigations concerning the acts, conduct, property, liabilities and financial condition of BLMIS, the operation of its business, and all other matters relevant to the liquidation proceeding. The SIPA Trustee requests voluntary cooperation whenever possible, but also has subpoena power to use at his discretion.
A final report will provide a public and transparent record of the proceeding that will contain results, a final accounting and professional recommendations.
On December 15, 2008, the United States District Court for the Southern District of New York entered an order commencing the liquidation of Bernard L. Madoff Investment Securities LLC and granting the application of the Securities Investor Protection Corporation for issuance of a protective decree adjudicating that the customers of BLMIS were in need of the protection afforded by SIPA. As part of that order, Irving H. Picard was appointed SIPA Trustee for the liquidation proceeding of BLMIS and BakerHostetler was appointed counsel to the SIPA Trustee. The case was removed to the United States Bankruptcy Court for the Southern District of New York.
On June 9, 2009, the substantive consolidation of the Estate of Bernard L. Madoff into the SIPA Proceeding of Bernard L. Madoff Investment Securities LLC was ordered.
The SIPA Trustee has retained various domestic and international experts and professionals to perform specific functions and assist in the orderly liquidation of the BLMIS estate in the effort to satisfy customer and other claims.
SIPA Proceeding Court Orders