Challah Hu Akbar: Arab Apartheid And the World Is Silent

Challah Hu Akbar: Arab Apartheid And the World Is Silent

WHAT IS YOUR BROKERAGE STATEMENT WORTH? NOT MUCH

Imagine yourself with a huge nest egg. You invested money with a well-respected money manager, a registered SEC broker-dealer, and watched your investment grow year after year. You took money out to pay everyday living expenses, taxes, maybe a vacation or two. You got rid of your long term care insurance because, after all, you had enough money to take care of yourself. You feel safe because the SEC has publicly acknowledged your money manager, you know that he was the chairman of an exchange. And, of course, you think, what’s the worst that can happen? After all, your money is SIPC insured – you see the SIPC logo on your statement each month.

Then, one day, you discover that the money manager was a crook and arrested for running the largest Ponzi scheme in US history. You find that the SIPC logo – a promise of insurance – is meaningless and, and finally, that SIPC, whose job it is to protect the investor, is demanding that you repay THEM for money you’d taken out in good faith over the years for such things as taxes, education for your kids, and normal living expenses. Something called a "claw back."

That is exactly what happened and is happening to former investors of Bernard L. Madoff Investment Securities. The past two years have been filled of every imaginable emotion , not dissimilar to the Kubler Ross Five Stages of grief: denial, anger, bargaining, depression and acceptance, although I haven’t met too many who have reached the final stage. Many are still in deep depressions, having had their dreams stolen, first by Bernie Madoff and now by laws that were put in place to protect investors being used against them. Madoff investors are for the most immigrants themselves, or the children of immigrants – citizens of the United States who lived the American Dream. They worked hard, raised families, built businesses, and saved.Their only crime, it seems, was trusting – trusting a man with a stellar CV and trusting that the system that was put in place to protect them would not be turned against them.

In 1970, Congress created the Securities Investment Protection Corporation. SIPC was an outgrowth of the Securities Investor Protection Act, enacted in 1970 and amended in 1978, a law put in place to restore confidence in Wall Street following some high profile broker failures and disastrous backroom troubles. There were several key elements of that bill: first and foremost, Wall Street would no longer have to keep customers’ stocks and bonds in the customers’ name – they could be kept in Wall Street’s – or “Street Name”. 2^nd – investors' reasonable expectations are and amounts shown in the statements and confirmations they receive from their brokers. 3rd - to fund this new non-profit, tax exempt corporation known as SIPC, Wall Street would be assessed fees to run the corporation; in other words, the SIPC – the organization empowered to protect investors -- would not require one tax payer dollar, not one. Wall Street has earned billions as a result of this law.

Truth be told, the SIPC does not exist protect investors. Rather, they have a long and storied history of protecting themselves and their funders – Wall Street. Over a decade ago, Gretchen Morgenson, a Pulitzer Prize winning reporter wrote “Investor Beware: Many Holes Weaken Safety Net for Victims of Failed Brokerages.” In that New York Times article, Ms. Morgenson wrote “the organization requires investors to run a gauntlet of legal technicalities that would challenge even those knowledgeable about securities law.” She further noted that “the Trustees in these cases have received far more [money] from representing the corporation than the corporation itself has paid to investors. Their critics say that trustees wanting repeat business from the corporation have an incentive to minimize payouts to investors. One trustee is the former president of the corporation.”

In the Madoff case, the Trustee is a man named Irving Picard. Mr. Picard, shortly after being appointed by the SIPC (who also pays his fees) joined the white shoe New York law firm of Baker & Hostetler. It should not come as any surprise that Mr. Picard has been the Trustee in 6 other SIPC liquidations prior to the Madoff matter. He says that customers' statements are worthless. He and his firm has billed the SIPC at a rate of $1 million per week and some estimate that total legal fees could exceed $1 billion – that is money that comes from the general SIPC fund, the same fund that Mary Schapiro, the SEC Chairman said was not solvent enough to pay all claims.

So I ask you, who do the Trustee and the SIPC really work for? If the Trustee is to prevail, we all lose ... your broker statements will be rendered worthless.

Egypt Demonstrations

As the demonstrations across Egypt itensify, it is becoming clear that the protesters are not only wanting full democracy, but economic equality. The divide between the haves and have nots is large and growing. With a majority of Egyptians under 30 and a bleak job outlook those not in the corrupt ruling class are demanding what many in the West have -- hope and opportunity.

The demonstrations in Egypt -- the largest pro-democracy demonstrations conceivably in the history of the Arab world -- follow the successful deposing of the dictator in Tunisia, in what is being referred to as the "Jasmine Revolution." And we all hope that it will be replaced by a democratic government but pro democracy revolutions don't necessarily lead to democracy.

We can only hope that the Muslim Brotherhood does not rise to power.

News Flash" President Born in Hawaii

Can we finally, once and for all, put this to bed?

http://www.nytimes.com/2010/12/25/us/25hawaii.html?_r=1&hp

Don't Believe Everything You Read

$7.2 Billion Settlement Reached with Picower Estate in Madoff Fraud. That's a very impressive headline. But I challenge you to look behind the headlines, behind the big numbers. Friends have been calling me and my family all day saying "wow: isn't this great ... you're going to get money back." Well, the truth is that only a small fraction of investors will ever see a dime of that money. For starters, the Trustee has been largely quiet about how any recovered funds will be distributed. But let's put that aside for a moment. Any monies recovered will go only to a select few (15% of claimants). Those invested with feeder funds, fund of funds, union pension, or other retirement plans, will not see a penny. Nor will those who according to the Trustee's definition of "net equity," a unique "cash-in/cash-out definition, have a 'negative net equity." His definition has been challenged by a number of lawyers representing victims of the worst financial crime in American history. The Federal Bankruptcy judge, Judge Burton Lifland, ruled in Mr. Picard's favor last year (not surprising since Judge Lifland has, not once, ever ruled against Mr. Picard). Briefs have been submitted and oral arguments are slated for first quarter next year in the 2d Circuit Court of Appeals here in New York city.

Don't get me wrong, this is a great achievement for the Trustee, and yes, there are some victims who will recoup money; maybe it's "many" but I can assure you it is far from most.

Juan Williams v. Helen Thomas - Double Standard?

So, Juan Williams is fired for saying that he fears for his life when he gets on a plane with someone in Muslim garb. Many websites are abuzz applauding NPR for taking swift action. How is it ok to have a journalist with such biased views? Right? Well, let's now back track a few months to the Helen Thomas affair. The same websites were appalled that a journalist was not allowed to express her opinion -- thus highlighting the double standard when it comes to Israel ... and Jews. Reprehensible comments about Jews, often times based on erroneous information and sometimes even lies, are lauded as protected by First Amendment rights. But, expressing an opinion about Muslims, equally as reprehensible is seen as biased. Should they not be treated the same?

Armenian Genocide: Let's Call it What it Is

For years, Israel has refrained from referencing the slaughter of millions of Armenians at the hands of the Turks as a "genocide" for fear of upsetting Israel's only "ally" in the Muslim world, Turkey. However, recent current events call into question whether or not Turkey is an ally at all. Turkey has been at the forefront of the Israel bashing, whether it be their criticism of Israel during its wars against Hezbollah in 2005 or Operation Cast Lead in 2008, or its role in the so-called "Flotilla Incident." Is this a way to treat your "ally?"

Shortly after the disastrous flotilla incident, Turkey's Prime Minister, Recep Tayyip Erdogan, announced that Israel should be "punished" for its "bloody massacre" of the so-called activists aboard the so-called humanitarian ship. However, the Prime Minister all but ignored requests from the Prime Minister of Israel to help prevent any confrontation. Erdogan's attacks on Israel go back to 2002 when he called Israel a "terror state," a pretty bold statement from a country that has yet to acknowledge its role in the slaughter of over half of the world's 2.5 million Armenians.

We as Jews have a duty and an obligation to speak out against injustice in the world and to acknowledge any attempt at ethnic cleansing. Turkey can deny all they want and wish it would go away, but if it walks like a duck, and looks like a duck ...

Perhaps it's time, as Peter Balakian notes here for Israel to rethink this relationship.