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Seanna Brown Quoted in Bloomberg Article Regarding Second Circuit's Decision Against Madoff Investors

News / September 24, 2020

Bloomberg reporter Alex Wolf’s article on September 24, 2020, “Madoff Investors Must Return Profits in Clawback: 2d Cir.,” named BakerHostetler Partner Seanna R. Brown, as well as SIPA Trustee and BakerHostetler Partner Irving H. Picard. The article referenced the SIPA Trustee’s victory in the Picard v. Gettinger, et al. matter before the Second Circuit. On September 24, 2020, the Second Circuit affirmed the district court’s judgment, holding that investors cannot give value for fictitious profits received in a Ponzi scheme.

Investors who profited from Bernard Madoff’s Ponzi scheme “…must return millions they received in excess of their principal, the Second Circuit ruled, affirming judgments allowing the firm’s liquidating trustee to claw back the funds.” As Wolf reported, a federal appellate panel said, “The transfers weren’t received in exchange ‘for value’ or entitlement under SIPA, the three-judge panel said. The profits thus aren’t exempt from clawback under the bankruptcy code.” The article quoted the court’s decision which said, “Concluding otherwise would violate SIPA by permitting a conflicting provision of the Bankruptcy Code to apply and ignoring SIPA’s mandate that customers with net equity claims receive priority over general creditors.”

The article quotes Brown saying, “The trustee is pleased that this long-running dispute has been concluded in his favor, which will allow him to recover additional funds for distribution to Madoff’s customers who still have not recovered their principal.”

The appeal is Picard v. Gettinger, et al., case numbers 19-429, 19-443, 19-501, and 19-510, in the U.S. Court of Appeals for the Second Circuit.

Read the article.