Is the SIPC responsible for helping Madoff clients?
The Securities Investor Protection Corporation (also known as SIPC) maintains a special reserve fund — authorized by Congress — to help investors who had accounts and brokerage firms that failed. Technically, when a brokerage firm fails, and owes customers cash and securities that are missing from customer accounts, SIPC usually gets involved. Keep in mind: Bernard Madoff’s securities firm did not fail. His investment advisory practice turned out to be a fraud. SIPC does not work like the FDIC. Protection for investment fraud does not exist in the United States. And since SIPC has a reserve of just over $1 billion, there is simply no way it would be able to compensate all victims in the event of loss due to investment fraud. The focus of SIPC is very narrow… SIPC was created to help restore funds to investors dealing with bankrupt and otherwise financially troubled brokerage firms. Not fraud. I’m not a lawyer and don’t pretend to give legal advice. But it seems to me that if some of th
