The Supreme Court has cleared the way for Irving Picard, the Trustee overseeing the Madoff liquidation proceeding, to distribute billions of dollars to victims of Madoff’s Ponzi scheme. On Monday, the Court declined to hear appeals in two cases from the Second Circuit challenging Picard’s formula for repaying victims.
Both the district court and Second Circuit had approved Picard’s formula, which barred investors who withdrew more money than their initial investment with Madoff (so called “net winners”), from participating in any recovery and also subjected them to clawback suits. In seeking certiorari, certain net winners argued that a more appropriate formula should allow them to recover the amount listed on the last account statement they received before the Ponzi scheme unraveled. Their petitions for certiorari can be viewed here and here.
The Court’s decision to decline to hear the appeals effectively confirms the Second Circuit’s ruling – and supports the Securities and Exchange Commission’s position, which advocated that the Court deny certiorari because the SEC believed the Second Circuit ruling was correct.
Following on the heels of the Supreme Court decision, the New York Times reported yesterday that Peter Madoff, Bernard Madoff’s younger brother and the former chief compliance officer of Bernard L. Madoff Investment Securities LLC, will plead guilty to securities fraud in connection with the Ponzi scheme.
For additional insights and analysis, see Madoff Investor Appeal Won’t be Heard by Supreme Court, Madoff Payouts Won’t Get US Supreme Court Review, and Supreme Court Declines to Hear Madoff Dispute.