Forthcoming in The Investment Professional, The Journal of the New York Society of Security Analysts^®, Vol. 2, No. 4, Fall 2009

Irving Picard

Picard: The role and duties of the trustee are outlined in the statute [the Securities Investor Protection Act of 1970]. My job has lots of parts. I collect assets. I was running a business for awhile in the Madoff case. . . . We even kept the employees on for four or five months because we were trying to sell that business, and we felt there was more value to it with its people. In April we sold that business. [Madoff’s market-making business was auctioned off and sold to Castor Pollux for $1 million plus up to $24.5 million in deferred compensation.]

We conducted an investigation of the case. In July I filed a report with the bankruptcy court on our progress. There will be another report in November. We still have ERISA [Employee Retirement Income Security Act] problems, healthcare issues. . . . I’m also in charge of customer claims and what our decision is on each of those claims. We have gotten sixteen thousand claims that we are reviewing.

Pizzani: Must everything you do be approved through the bankruptcy court?

Picard: No. A lot of what we do doesn’t require bankruptcy court approval. However, a lot requires the approval of the SIPC.

Pizzani: How is the Madoff case different from other, previous cases?

Picard: Most liquidations under the Securities Investors Protection Act involve firms that ran into financial difficulty. This is not one of those. This is not a business reversal, not a company that made a bad bet in the market or made a trade for a customer who reneged.

There have been cases such as A.R. Baron and Co. or Stratton Oakmont Inc. that involved market manipulation. In one case there were principals who stole $7.5 million from customers. But in those cases, unlike Mr. Madoff, they were introducing brokers, and they had a clearing firm that was responsible for the investments. In Mr. Madoff’s case he was self-clearing. If another company would have cleared his firm’s trades, we would not have this problem.

Pizzani: How is the Madoff liquidation different from other liquidations you’ve handled in the past?

Picard: As I tell people, here every day is Groundhog Day. By that I mean every day is different. I’m not Bill Murray . . . but you can think of me that way. It’s never easy. It’s not every day we’re putting out fires, but every day is very different. That’s what makes this case very challenging.

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