Ponzi Scheme

News & Analysis as of

SEC Wins Summary Judgment Ruling In Ponzi Scheme Case

The Commission prevailed in an investment fund scheme action, obtaining a favorable summary judgment ruling. In reaching its conclusion the Court rejected claims that the action was time barred and that the cause of action...more

Credit Crunch Digest -- September 2014

This issue of the Credit Crunch Digest focuses on the push by the Federal Reserve for the creation of a Libor alternative; additional updates on high-frequency trading lawsuits; settlements of residential mortgage backed...more

This Week In Securities Litigation

The Fifth Circuit decided a significant case on loss causation. The Court concluded that the truth could emerge from a series of disclosures which, in and of themselves were not sufficient to uncover the fraud, but which when...more

SEC Brings Another ATM Based Ponzi Scheme Case

Ponzi and investment scheme cases are a staple of SEC enforcement in the post Madoff world. Emerging, however, may be a new trend based on a subset of these frauds – investments in ATM machines. At the close of last month the...more

SEC Obtains Asset Freeze of Turks and Caicos Company Conducting Ponzi Scheme

The Securities and Exchange Commission has obtained an emergency asset freeze of a Turks and Caicos company that allegedly ran a Ponzi scheme in Florida. According to the SEC’s complaint, between November 2004 and May 2014,...more

This Week In Securities Litigation

The Commission announced its largest whistleblower action this week – an award to a person overseas of over $30 million. The agency also filed a series of actions this week....more

Corporate and Financial Weekly Digest - Volume IX, Issue 38

In this issue: - SEC Releases Strategic Plan for 2014–2018 - House Passes Bill H.R. 5405 “Promoting Job Creation and Reducing Small Business Burdens Act” - FINRA Board Approves Several Rulemaking Items...more

Securities Fraud: When Pennies Count

Most securities fraud cases involve significant thefts from individual victims, like the alleged $64 billion Ponzi scheme run by Bernie Madoff. However, some cases show that fraudulent conduct involving small amounts of money...more

Social Media Start-Up Capital: Don't Try a Ponzi Scheme

You’ve got the perfect idea for a social media site, but how do you attract a critical mass of members to launch it? Your credit cards are maxed out and your friends and family are tapped too. Can you attract members by...more

U.S. District Court Limits the Extraterritorial Application of U.S. Bankruptcy Law but Important Considerations for Foreign...

On July 6, 2014, Judge Jed S. Rakoff, United States District Judge for the Southern District of New York, declined to extend the reaches of section 550(a) of the Bankruptcy Code abroad to permit the recovery of funds that...more

SEC Efforts To Compel SIPIC Coverage For Stanford Victims Rejected

The D.C. Circuit rejected efforts by the SEC to compel the Securities Investor Protection Corporation to liquidate a broker-dealer that was part of the Stanford Ponzi scheme empire. The investors had purchased CDs from an...more

Madoff Bankruptcy Decision Offers Protection for Foreign Investors

In re Madoff Securities Extends Morrison Framework to Prevent Avoidance of Purely Foreign Transfers under SIPA and the Bankruptcy Code - Applying the U.S. Supreme Court’s landmark decision in Morrison v. National...more

CRA: Tax treatment of Ponzi scheme investments

We have previously written about court decisions on the tax results arising from taxpayers’ (failed) investments in Ponzi schemes (see our posts on Roszko v. The Queen (2014 TCC 59), Johnson v. The Queen (2011 TCC 54) and...more

Second Circuit Doubles Down on Rule Preventing Non-Settling Parties from Objecting to Class Settlement

The robustness of the rule preventing non-settling defendants from objecting to a class settlement has received a boost from the Second Circuit. The class settlement at issue involved the claims of investors against a hedge...more

Supreme Court Declines to Consider Madoff Appeal

On Monday, the U.S. Supreme Court refused to take up an appeal brought by Irving Picard, the court-appointed bankruptcy trustee charged with recovering assets on behalf of Madoff’s bankruptcy estate and distributing them to...more

Clawback Suit Targets International Investors

In 2008, a few months before the $65 billion Madoff Ponzi scheme fell apart, the $3.65 billion Petters Ponzi scheme made headlines. Tom Petters told investors that they were financing the purchase and sale of consumer...more

Ruling Explains and Extends Application of Good Faith Defense to Fraudulent Transfer Actions in SIPA Context

In an April 27, 2014 decision in the Madoff cases, Judge Jed S. Rakoff ruled that the standard of good faith should be considered differently in a Securities Investor Protection Act (SIPA) liquidation. To defeat a good faith...more

If the SEC Misses the SOL, It’s SOL (Sorry, Out of Luck) – District Court Holds Statute of Limitations Is Jurisdictional and...

The SEC suffered a blow very recently when Judge James Lawrence King of the U.S. District Court for the Southern District of Florida entered summary judgment dismissing the entirety of its alleged Ponzi scheme case on...more

Graham Decision Adopts Gabelli Rationale to Apply Five-Year Statute of Limitations to Enforcement Actions Seeking Equitable Relief

The decision of a U.S. District Court for the Southern District of Florida judge to dismiss a case involving an alleged $300 million Ponzi scheme on statute of limitations grounds holds significant implications for time...more

Privy Council rules on Fairfield

On 16 April 2014, the Privy Council ruled in the claims brought by the liquidators of Fairfield, one of the largest feeder funds into Bernard Madoff’s investment company. The BVI Commercial Court and the Eastern...more

Credit Crunch Digest

This issue of the Credit Crunch Digest focuses on recent developments in Libor and the Foreign Exchange market litigation; Credit Suisse’s $885 million mortgage settlement with the Federal Housing Finance Agency; Irving...more

This Week In Securities Litigation (Week ending March 28, 2014)

The New York Attorney General secured one of the most significant market crisis settlements to date this week. The former CEO of Bank of America agreed to a three year bar from serving as an officer or director of a public...more

Bernstein Shur Business and Commercial Litigation Newsletter #38

We are pleased to present the 38th edition of the Bernstein Shur Business and Commercial Litigation Newsletter. This month, we highlight recent convictions in the Madoff scandal, class action litigation against General Motors...more

SEC Prevails in Lawsuit Involving $50 Million Ponzi Scheme

On March 6, the US District Court for the Eastern District of Michigan ordered the former leaders of an investment group to pay more than $8 million in disgorgement and fines for their role in running a $50 million real...more

Texas Two Step: “In Connection With” At The End Of Its Tether?

The familiar “in connection with the purchase or sale” securities-litigation requirement may not be unlimited in its breadth, after all. On February 26, the US Supreme Court pulled up short defendants in litigation by...more

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