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Madoff compensation scheme ruling expected

A judge in the UK is set to rule on a potential compensation scheme for those investors involved in the Madoff Ponzi scheme which spectacularly collapsed back in 2008. The court-appointed trustees are in the process of recovering assets on behalf of Madoff investors although there is some debate as to whether those who withdrew more money than they invested should share in any potential compensation payouts.

On the surface it would appear to be fair and reasonable in compensating those who have lost money rather than compensating those who took out more money than they invested in the Ponzi scheme. However, a number of "net gainers" (estimated to be around 2,500 accounts) have stepped forward with legal representation claiming that any compensation should be spread amongst all investors, whether or not they have lost out financially.

A UK judge will soon rule on the issue with the 2,335 Madoff accounts showing a "net loss" obviously hoping to get a larger share of the compensation pie. However, it is proving difficult for the trustees to locate and take control of various Madoff assets which have disappeared or are proving nearly impossible to trace. Even though investors believe the Madoff funds held around $65 billion worth of securities, the compensation fund will be nowhere near this kind of figure!

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