The situation for Madoff investors gets worse. After the news broke that the $50 billion dollar investment fund was really a ponzi scheme, thousands of investors which include including wealthy individuals and institutions realized they have lost millions. Some have been wiped out by the scam. In related news, one of the fund managers committed suicide over the debacle.
Now, according to a December 24, 2008 Bloomberg news article A U.S. Bankruptcy Court yesterday upheld a plan by the liquidator of Bernard Madoff’s investment fund to restrict individual compensation for victims of his alleged scam to $500,000, including $100,000 in cash. In essence most investors will literally get pennies on the dollar in compensation for their losses.
The bankruptcy court’s decision to uphold a plan by Securities Investor Protection Corp. (SIPC) means that anyone trying to get additional compensation will have to file a separate lawsuit or join a class-action claim, according to an article in the NY Post said.
The bankruptcy court also upheld SIPC’s plan to limit claims to investors who placed money with Madoff in the 12 months before his arrest on Dec. 11, the newspaper reported.
SIPC plans to start sending out claims forms to customers considered eligible for compensation, no later then January 9, 2009.