Financial Victimization

Floor Speech

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Mr. GARRETT. Mr. Speaker, for approximately the past six years,
innocent customers of three failed broker-dealers--the securities firms
of Bernie Madoff, Allan Stanford, and McGill, Smith, have been unfairly
victimized time and time again despite the existence of remedial
legislation enacted by Congress for the specific purpose of protecting
such customers.

Initially these customers were victimized by the nefarious
fraudsters, whose Ponzi schemes caused the failure of several
securities firms and resulted in financial devastation for so many.
Next, these customers were victimized by the Securities Investor
Protection Corporation (SIPC) and their henchmen, whose antics, behavior, and
positions were the antithesis of investor protection--financial self
interest and preservation clearly appeared to be their guiding mantra.
Finally, when SIPC sought the Court's blessing for its wrongful conduct
and breach of trust, the court's bizarre deference to SIPC and their
blatant misapplication of the Securities Investor Protection Act (SIPA)
resulted in a perverted process and erroneous interpretations of SIPA,
which, further victimized these customers by depriving them of the
financial protections and benefits mandated by SIPA and exposed them to
draconian claw-back lawsuits seeking to strip them of what few
remaining assets they might still possess.

Examples abound supporting these conclusions. If someone walked into
a securities firm and purchased a stock or a bond, who would believe
that such a person would not be considered a ``customer'' and would be
denied basic Congressionally created customer protections? Why would a
customer of a failed securities house, one who had no knowledge of a
Ponzi scheme operated by the broker-dealer, be subjected to costly
litigation to defend the returns their account statements told them
they had earned from their investments? Why would a customer of a
broker-dealer receive a monthly ``account statement'', purporting to
evidence their financial position at the firm, and later the parties
charged with protecting the rights of those customers be allowed to
disregard those statements and eliminate all stated returns in the
account? And who could have ever anticipated that this same entity
would elect to adopt a ``valuation'' methodology patently designed to
provide the lowest values to the customers in order to maximize its own
bank accounts and resources? While these results seem fanciful and far
fetched, they are the realities that innocent customers of these three
broker dealers have had to endure.

While the courts are charged with the responsibility of interpreting
statutes, that function properly involves determining Congressional
intent. If, as here, the Courts have misinterpreted that intent, it is
then the role of Congress to reaffirm what it actually meant and to
clarify how Congress meant to achieve the desired results. Thus the
Garrett-Maloney bill is not an attempt to rewrite SIPA retroactively.
Rather it is intended to reaffirm what Congress meant all along--the
protection of innocent customers who have been defrauded by a dishonest
broker-dealer.

When Congress reconvenes in January, we will expeditiously address
these important issues--victims have been victimized for too long.
Victims will receive what they are due. Victims who had no actual
knowledge of the frauds will be extricated from the harassing ``claw
back'' lawsuits. Much progress was made on these issues during the past
two years--numerous hearings were held and support for the Garrett-
Maloney bill is now robust and bipartisan. Addressing these issues, and
providing appropriate remedies for the victims, will be a top priority
in January, indeed an urgent one.

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