Aug. 30 (Bloomberg) -- The Securities Investor Protection Corp. said it opposes the dismissal of a lawsuit brought by the liquidator of Bernhard Madoff’s investment firm against Bank Medici AG founder Sonja Kohn and UniCredit SpA.
Lawyers for SIPC said in a filing yesterday in federal court in Manhattan that, as the agency charged with the administration of the Securities Investor Protection Act and as an adviser to the court, it opposes UniCredit’s and the related defendants’ request to dismiss trustee Irving Picard’s common law claims, including those for unjust enrichment.
“There is no legal barrier to the trustee’s pursuit of his common law claims to recover customer property,” according to the SIPC filing. “The fact that customers have assigned their claims for such recoveries to the trustee merely bolsters his standing.”
UniCredit last month asked a district judge to dismiss Picard’s “hollow” racketeering claims seeking $59 billion from the bank, or three times what investors lost in the Ponzi scheme.
Picard named Milan-based UniCredit and its Bank Austria unit in a December complaint against Bank Medici, Kohn and dozens of other Austrian and Italian parties. He demanded $19.6 billion -- his estimate at the time of all principal lost by Madoff investors -- using the Racketeer Influenced and Corrupt Organizations Act to triple the amount.
The claim is the largest of more than 1,000 filed by Picard.
In yesterday’s filing, SIPC said that while Picard in his opposition to the motion to dismiss focuses on the RICO claims, it seeks to support his common law claims. U.S. District Judge Jed Rakoff last month ruled that Picard didn’t have standing to pursue common law claims against London-based HSBC Holdings Plc.
The SPIC lawyers said they respectfully disagree with that ruling, which they said is inconsistent with the provisions and purposes of the Securities Investors Protection Act and will undermine future applications of the law in lawsuits.
The case is Picard v. Kohn, 11-cv-01181, U.S. District Court, Southern District of New York (Manhattan).
--With assistance from Linda Sandler in New York. Editors: Michael Hytha, Peter Blumberg
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