In a follow up to our recent critique of dividing defrauded consumers into “net winners” and “net losers” comes a decision from U.S. District Judge Jed Rakoff, who has dismissed Bernie Madoff trustee Irving Picard’s claims filed to regain nearly $1 billion from Fred Wilpon and Saul Katz, the owners of baseball’s New York Mets. The decision may potentially limit Picard’s future chances of recouping investors’ initial investments with Madoff, in what analysts have dubbed “clawback suits” filed by the trustee against the defrauded.
The judge’s decision illustrates a difference between U.S. bankruptcy law and securities law regarding when investors should return money previously received from their broker. A thorough, easy-to-read explanation of fraud can be found on our home site. For New York law, that period spans up to six years prior to a broker’s bankruptcy, while Federal law caps that limit at only two years. What Picard will be able to recoup depends greatly upon whether he will continue to be held to Federal standards. Several district court judges have in recent months sided with Madoff investors’ requests to move cases out of bankruptcy court, a setting that typically favors the trustee.
What we can all learn from these rulings is that where and when an investment is made – as well as where and when any necessary litigation takes place – can be just as important as the venture you’ve chosen to pursue. For one, it’s notable that our national standard for “clawback” measures is more favorable than that of New York, a state housing Wall Street and an immense amount of high stakes real estate, as well as many entertainment and banking endeavors. Clearly, it pays for investors to be informed about their state’s “clawback” legislature: for those of us engaging the market longterm, timing is everything, and how recently you’ve been the victim of fraud sets crucial perimeters.
New York Securities Fraud Lawyers Blog
