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What’s even less probable than the government breaking even on its AIG (NYSE:AIG) bailout? How about Bernie Madoff’s investors getting all their money back? That’s what Stephen Gandel reckons might happen:

In the past few weeks, Irving Picard, the bankruptcy trustee in the financial fraud case has issued a flurry of lawsuits and settlements. The trustee netted $500 million on Monday alone in a settlement with Swiss bank Union Bancaire Privee. Picard’s moves are raising the possibility that Madoff investors could get all of their money back and then some. In fact, if Picard is successful in all of his cases, investors in the what has been called the largest financial fraud in history could walk away with a 65% profit.

I doubt, somehow, that Picard will get anything like the sums he’s asking for, which include $9 billion from HSBC (HBC) alone. But at this point it might well make sense for Madoff’s investors to start investigating how much their claims might be worth. Gandel estimates the total investment losses to be just under $20 billion, with a lower bound of $5.8 billion. That’s more than enough money for hedge funds to sit up and take note: if they reckon that Picard has teeth, I’m sure there are one or two of them willing to buy up claims at a discount. For investors who placed eight-figure sums with Madoff, that could translate to a seven-figure payout. Which would make a very nice present, this holiday season.

Source: Is There a Secondary Market in Madoff Claims?