OnWallStreetSince1974

Madoff Investors Deserve Sympathy, Not a Bailout

To those who say that Madoff's returns were impossible, the annualized return of the S&P 500 Index from 12/12/88 through 12/11/2008 [20 years, similar to many of Madoff's investors' time duration] was 10.79% per annum, more volatile, yes, but don't pretend that such an annualized return is impossible and therefore a red flag for long term investors. Also, if some of the better annualized returns of some hedge fund managers, e.g., Paul Tudor Jones, Jim Simons, et al were deleveraged, the 10% per annum return would be easily achievable.

Furthermore, If the U.S. Gov't immediately paid each account a maximum of $5 million in settlement -- based upon each Nov 30, 2008 Bernard L. Madoff Investment Securities LLC end of month statement dollar value amount -- in exchange for look back taxes paid & walk forward theft deductions, this would save $billions, along with the cost and effort of the legal process, and, in particular and most favorably, the excessive legal fees and the decade plus time of the adversarial legal process. In addition, claw back rights should be extinguished.

This would be a matter of the benefit to public policy, as a whole, and the immediate amelioration in the life circumstances of thousands of the elderly who, and most reasonably so, thought that after so many years the SEC was watching out for their honest interests in terms of both the brokerage and investment advisory/power of attorney fiduciary responsibilities of Bernard L. Madoff and of Bernard L. Madoff Investment Securities LLC.

For example, if the average individual account had a $2 million balance a/o Novemeber 30, 2008 end of month statement, and there were 5,000 such accounts [the 8,000+ claim forms sent out by the SIPC Trustee includes many duplicates], the total amount paid by the U.S. Government to all account holders would cumulatively amount to $10 billion, which is an estimated $7 billion to $10 billion LESS than the total estimated $17 to $20 billion the U.S. Treasury will lose to tax refunds & theft deductions, not including the judicial resources that will be consumed by all forms of litigation.

I therefore recommend that my suggestions should be adopted as an alternative to years of questionable & costly civil actions, complaints, and cost to the U.S. Treasury.

This is not class warfare, just simple economics, wherein the ONLY choices are . . . "Pay the victims $10 bln today [my plan] or upwards of $20 bln in the near future [the IRS plan]."