WASHINGTON The trustee liquidating the assets of accused swindler Bernard Madoff has started determining which investor claims will be easiest to resolve and has mailed out notices to about 10 Madoff clients, the president of the Securities Investor Protection Corp told Reuters on Tuesday.
SIPC President Stephen Harbeck said over the past few days the trustee started mailing 'determinations' to some Madoff clients with the easiest claims, such as those who deposited money with Madoff's fund and never took any out.
Once those Madoff customers send back the related documents, Harbeck said SIPC "will work as swiftly as possible to get the money back to them."
SIPC, a nonprofit agency set up by Congress to maintain a fund to help investors who had accounts at failed brokerage firms, can pay a single investor a maximum of $500,000.
Harbeck said Madoff's trustee, New York lawyer Irving Picard, has received about 3,000 claims from Madoff clients. In January, more than 8,000 claim forms were mailed to investors.
Authorities said Madoff, 70, confessed to running a $50 billion scheme, bilking investors around the world. So far, less than $1 billion has been recovered.
Given the magnitude of Madoff's fraud and last year's collapse of large investment bank Lehman Brothers, SIPC was forced to change how it replenishes its fund.
Since 1995 broker-dealers paid SIPC an annual assessment fee of $150. As of April 1, broker dealers' assessment fees will be based on one-quarter of one percent of the firm's net operating revenue, Harbeck said.
SIPC's fund has about $1.6 billion and the agency also has a $1 billion line of credit with the Treasury Department.
Harbeck said SIPC's board made this decision in anticipation of expenditures arising out of the Madoff case and to replenish the SIPC fund. However, he was not sure how much the new assessment fee would raise.
Wall Street group, the Securities Industry and Financial Markets Association, said broker-dealer firms understand the need to ensure that SIPC is able to fulfill its duties.
Harbeck said SIPC's board is not seeking any major legislation to restructure the agency, which has come under pressure with the failure of Lehman and Madoff's alleged fraud.