Madoff victims confront SIPC

The Securities Investors Protection Corp., is set up to compensate victims of brokerage firms that fail with advances on claims of $500,000 and a proportional amount of the assets recovered, The New York Times reported Wednesday.

The corporation's president and chief executive officer Stephen Harbeck, scheduled to testify before the House Financial Services subcommittee, has said, "nobody likes to say no to people who are, without question, victims."

He also says he is limited by law as to who qualifies as a victim.

The sometimes emotional differentiation boils down to, "a zero-sum game," he said. "A dollar we give to someone who is not eligible is a dollar we do not have for someone who is."

In the Madoff case, thousands of investors whose money went to Madoff through a pension plan or feeder fund do not qualify for SIPC help, Harbeck said.

In another argument, victims want compensation based on the $64.8 billion in losses shown on account statements before Madoff's arrest in December 2008.

But the sum of claims among victims who received less from Madoff than they invested amounts to closer to $20 billion, Harbeck said.

Copyright 2009 by United Press International.