Laurence Kotlikoff and I have about as much in common when it comes to how we see economically-related thing as a Southern Baptist and a Gay Pride supporter have in common on sexual congress between adults, but when you’re right — you’re right.
If you experience an insured loss and the insurance company doesn’t pay, you know you’ve been scammed. As I’ve discussed in a series of columns posted at www.kotlikoff.net, SIPC (the Securities Investor Protection Corporation) is running an enormous scam in claiming to insure our brokerage accounts against fraud. SIPC’s refusal to pay the legitimate claims of most Madoff victims and all Stanford victims makes this abundantly clear.
Here’s the gist of the SIPC “guarantee” — you’re not protected against making a bad investment, even if the broker was the one who suggested or steered you into it.
However, you are protected against missing securities — that is, theft.
So in the case of Stanford and Madoff what happened is that we had a crook that stole the funds. If you get a statement from a broker that says you own 100 shares of IBM and when the time comes there really aren’t 100 shares of IBM being held in street name for your benefit, the SIPC is supposed to cover that.
That’s the entire point of the SIPC.
But what they argued, successfully in court, is that a Ponzi Scheme unknown to the customer is not “missing securities.”
In other words theft is only theft when they say it is.
That’s sort of like all the Banksters who said that perjury wasn’t perjury because, well, they said it wasn’t. And the courts let them get away with that in thousands of foreclosure filings. The same thing was true with banksters selling worthless securities and all other sorts of games during the “go-go” years — all of which bit people in the ass when the truth came out.
Or, for that matter, it’s like an insurance company selling you fire insurance and then, after the fact, claiming that because your second cousin didn’t cause it that’s not actually a fire — as you stand beside the smoldering remains of your home.
This sort of lawless bullshit is part and parcel of everything these days. And while Laurence is right about there being no remedy other than closing your accounts (where will you put the funds, may I ask?) where he’s wrong is that this sort of argument ought to be considered evidence of bad faith at best and possibly even outright fraud in the inducement.
Of course that would require handcuffs, and Mr. K isn’t ready to call for those. I, on the other hand, have been looking for them for years in this regard.
You should read his article, by the way, in full.
It shows you exactly how depraved our government has become in this regard in that such an argument wasn’t laughed out of the court and the attorney making the argument sanctioned.
As for what to do, well, I know what America won’t do — no demand for it to stop will be made.
Bonne chance mes amis.