Victory for Kleinberg Kaplan Clients in U.S. Supreme Court

Kleinberg, Kaplan, Wolff & Cohen attorneys David Parker and Matthew Gold are on the steering committee of the legal team that won an important victory in the United States Supreme Court for former customers of Bernard Madoff Securities.

The Court denied certiorari, and would not consider a bid by a court-appointed trustee to claw back money from hundreds of victims of Bernard Madoff’s Ponzi scheme. With this determination, the justices left in place the ruling by the New York-based Second U.S. Circuit Court of Appeals from December, which said the amounts paid out to those Madoff customers more than two years before the bankruptcy filing were shielded by a provision of federal bankruptcy law that prohibits recovery of securities-related payments made by a stockbroker.

The Supreme Court’s action sharply restricts the remedies available to Irving Picard, the Madoff Securities trustee, in his efforts to recover funds from innocent former Madoff Securities customers. Picard had sought to disallow payments made during the six years before the beginning of the Madoff Securities liquidation proceedings, and this ruling limits him to a two year period. The result represents a major victory for innocent former customers, including clients of Kleinberg Kaplan, and a significant precedent restricting clawback actions in bankruptcy cases.