Investors who cashed out of Bernard Madoff’s alleged Ponzi scheme may be on the hook for so-called “clawback” lawsuits brought by a bankruptcy trustee looking to recover money for fraud victims.
Firms say clients that invested in Bernard L. Madoff Investment Securities LLC, which allegedly defrauded investors of $50 billion, are worried about the possibility of clawback cases, which are extremely common in bankruptcies following Ponzi schemes. Investors targeted for clawbacks may have varying avenues of recourse, depending on which state they live in and whether they have assets besides their primary residence. The Securities Investor Protection Corp., a membership organization of securities broker-dealers, placed Madoff’s company in bankruptcy liquidation on Dec. 15. The case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC.
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