The Securities and Exchange Commission is trying to prevent victims of Bernard Madoff’s Ponzi scheme from filing their own personal bankruptcy claims against the disgraced money manager, reports the Wall Street Journal. The SEC, in conjunction with the Department of Justice, yesterday asked a U.S. district judge to disallow former Madoff investors from pursuing their own individual actions, sending the message that the regulator will handle the case on its own.
The group of investors had previously attempted to lift a stay on the SEC case against Madoff that prevents former Madoff clients from pursuing their own bankruptcy actions. The SEC and DoJ yesterday filed a motion in Manhattan District Court asking Judge Louis Stanton to reject the motion.
Individual Madoff victims worry that the red tape associated with the bankruptcy action procedure will prevent them from getting their full due. “Neither the SEC nor the Justice Department have procedures in place to determine claims, the amount of claims, and to pay the money for creditors,” said Jonathan M. Landers, a legal representative for the Madoff victims.
The SEC refutes this claim, saying that, “the SEC can state unequivocally that…any Madoff assets it recovers will be distributed to Madoff’s victims and creditors.”
Madoff’s investment firm is currently being liquidated by a court-appointed trustee, with the proceeds to go to investors. Madoff himself is expected to be sentenced in June.