This is an update regarding the collapse of securities firm Bernard L. Madoff Investment Securities LLC (“BMIS”) and the associated fraud scheme to which its founder, Bernard Madoff, admitted last week.
Last Friday, December 12, 2008, the U.S. District Court for the Southern District of New York (“SDNY”), in a proceeding commenced by the U.S. Securities and Exchange Commission (SEC), appointed Lee S. Richards of the law firm of Richards Kibbe & Orbe LLP as receiver for BMIS.
On Monday, December 15, 2008, the Securities Investor Protection Corporation (SIPC), the securities-industry funded nonprofit membership organization for broker-dealers which maintains a special reserve fund authorized by Congress to restore funds to investors at failed brokerage firms, announced that it is liquidating BMIS (a SIPC member) under the Securities Investor Protection Act of 1970 (“SIPA”) and commenced a liquidation proceeding in the SDNY. The court determined that BMIS’s customers are in need of the protection afforded by SIPA and appointed Irving H. Picard as trustee for the liquidation of BMIS and the law firm of Baker & Hostetler LLP as counsel to Mr. Picard. The assets of BMIS are frozen at this time. The liquidation proceeding was transferred to the Bankruptcy Court and is now before Bankruptcy Judge James M. Peck.
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