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Madoff Is Wall Street's Hot New Investment

Banks buying up Ponzi claims to cash in later

By Rob Quinn, Newser Staff

Posted Jun 17, 2011 3:00 AM CDT | Updated Jun 17, 2011 3:19 AM CDT

(Newser) – The wizards of Wall Street have found a way to turn Bernard Madoff into a hot investment. Big banks have been buying up the claims of the victims of Madoff's massive Ponzi scheme, offering scammed investors a fraction of what they are owed in the hopes of making big profits later as a court-appointed trustee chases down the Madoff money and makes settlements, reports the Wall Street Journal.

"It's like a circus out there, a feeding frenzy," says a bankruptcy specialist who helped sell the rights to a major Madoff claim. "There's people buying and paying quite extraordinary prices." In a further twist, some of the biggest players buying up Madoff claims are the same operations that steered investors to him and will have to pay settlements to the trustee. Deep inside the federal Butner Correctional Complex in North Carolina, somebody may be chuckling.

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Bernie Madoff: Laughing on the inside? (AP Photo/Louis Lanzano, File)

A 2008 mugshot of Bernard Madoff, who will finish his sentence in 2139. (Department of Justice)

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There are some people who say that one of the best performing asset classes of 2010 was Madoff claims. - Richard Levin, head of the restructuring practice at Cravath, Swaine & Moore LLP

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Madoff Is Wall Street's Hot New Investment

Banks buying up Ponzi claims to cash in later

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Wall Street • financial markets • Ponzi scheme • Bernard Madoff • Bernard L. Madoff Investment Securities

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