Monday, March 1, 2010
U.S. Bankruptcy Judge Burton Lifland ruled today in favor of the SIPC Trustee in the liquidation of Bernard Madoff's securities firm, affirming that customers' claims are properly based on the amount of cash deposited by the customer less any amounts withdrawn by the customer (the "net investment method"). Some customers argued that the amounts of their claims should be based on the amounts set forth in their last financial statements received from Madoff (the 'last statement method"). Recognizing that choosing between these two competing calculations of "net equity" was not "plainly ascertainable in law," the court endorsed the trustee's net investment method after a thorough analysis of the plain meaning and legislative history of the relevant statute, controlling Second Circuit precedent, and considerations of equity and practicality. The New York Times has posted the opinion on its website.
An appeal of the decision is expected.