I 
112TH CONGRESS 
1ST SESSION H. R. 1987 
To amend the Securities Investor Protection Act of 1970 to provide insurance 
coverage for certain indirect investors caught in Ponzi schemes, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 25, 2011 
Mr. ACKERMAN introduced the following bill; which was referred to the 
Committee on Financial Services 
A BILL 
To amend the Securities Investor Protection Act of 1970 
to provide insurance coverage for certain indirect inves-
tors caught in Ponzi schemes, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Ponzi Scheme Investor 
Protection Act of 2011’’. 
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SEC. 2. ADDITIONAL PROTECTIONS FOR INVESTORS IN 
PONZI SCHEMES. 
(a) IN GENERAL.—The Securities Investor Protec-
tion Act of 1970 (15 U.S.C. 78aaa et seq.) is amended 
by inserting after section 8 the following new section: 
‘‘SEC. 
8A. 
SPECIAL 
PROVISIONS 
RELATED 
TO 
PONZI 
SCHEMES. 
‘‘(a) DETERMINATION BY TRUSTEE.—Promptly after 
the appointment of the trustee, such trustee shall deter-
mine if the debtor is a Ponzi scheme. If the trustee deter-
mines that the debtor is a Ponzi scheme— 
‘‘(1) the trustee shall notify SIPC; 
‘‘(2) SIPC shall make such determination pub-
licly available, including on SIPC’s Web site; and 
‘‘(3) if the trustee determines that customers 
invested more than $1,000,000,000 in such Ponzi 
scheme, the trustee and SIPC shall, not later than 
30 days after such determination is made, jointly 
submit to the Committee on Financial Services of 
the House, the Committee on Banking, Housing, 
and Urban Affairs of the Senate, and the Secretary 
of the Treasury a reasonable expected timeline for 
the consideration of claims made under this section. 
‘‘(b) STATEMENT OF CLAIM.— 
‘‘(1) IN GENERAL.—An indirect Ponzi scheme 
investor may, not later than the end of the 1-year 
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period beginning on the date SIPC makes a deter-
mination publicly available under subsection (a), file 
with the trustee a written claim— 
‘‘(A) stating the type of securities held by 
the Ponzi scheme on behalf of the Ponzi scheme 
investor on behalf of the indirect Ponzi scheme 
investor; 
‘‘(B) stating the number of such securities, 
or in the case of a pooled investment, the per-
centage of such securities; 
‘‘(C) stating the amount of any funds in-
vested by the indirect Ponzi scheme investor 
with the Ponzi scheme investor that were in-
vested with the Ponzi scheme, but for which the 
indirect Ponzi scheme investor has not received 
a statement or other documentation that would 
allow the indirect Ponzi scheme investor to 
identify in which securities the Ponzi scheme 
stated such funds were invested; and 
‘‘(D) containing such other information as 
SIPC may determine necessary to carry out the 
provisions of this section. 
‘‘(2) NOTICE.—At the time an indirect Ponzi 
scheme investor makes a claim under paragraph (1), 
the indirect Ponzi scheme investor shall also file a 
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copy of the claim with the appropriate Ponzi scheme 
investor. 
‘‘(c) COORDINATION WITH PONZI SCHEME INVES-
TOR.—To the extent necessary, the trustee shall coordi-
nate with Ponzi scheme investors to ensure proper pay-
ments to indirect Ponzi scheme investors under this sec-
tion. 
‘‘(d) PAYMENTS TO INDIRECT PONZI SCHEME INVES-
TORS.— 
‘‘(1) IN GENERAL.—After receipt of a written 
statement of claim pursuant to subsection (b), un-
less the trustee determines such claim to be fraudu-
lent, the trustee shall, with respect to the securities 
that are the subject of such claim, take the following 
actions in the following order: 
‘‘(A) With respect to a claim relating to se-
curities of a class and series of an issuer which 
are ascertainable from the books and records of 
the Ponzi scheme or are otherwise established 
to the satisfaction of the trustee, deliver securi-
ties of such class and series to the indirect 
Ponzi scheme investor if and to the extent 
available to satisfy such claims in whole or in 
part, with partial deliveries to be made pro rata 
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to the greatest extent considered practicable by 
the trustee. 
‘‘(B) Pay the indirect Ponzi scheme inves-
tor a cash amount equal to— 
‘‘(i) the value of any securities identi-
fied in the claim and not otherwise deliv-
ered to the indirect Ponzi scheme investor 
under subparagraph (A); and 
‘‘(ii) the value of any funds identified 
in the claim as being invested in the Ponzi 
scheme by the Ponzi scheme investor on 
behalf of the indirect Ponzi scheme inves-
tor, but for which the indirect Ponzi 
scheme investor is unable to identify in 
which specific securities the Ponzi scheme 
stated such funds were invested. 
‘‘(2) 
MAXIMUM
AMOUNT.—The 
aggregate 
amount of the value of all securities and cash deliv-
ered under paragraph (1) may not exceed, for each 
indirect Ponzi scheme investor, an amount equal 
to— 
‘‘(A) $100,000, minus 
‘‘(B) the aggregate amount of all cash and 
securities invested in the Ponzi scheme by the 
Ponzi scheme investor on behalf of the indirect 
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Ponzi scheme investor that is recovered by the 
Ponzi scheme investor from the trustee. 
‘‘(3) ADVANCES BY SIPC.—With respect to pay-
ments made pursuant to this section, the trustee 
may satisfy claims out of moneys made available to 
the trustee by SIPC notwithstanding the fact that 
there has not been any showing or determination 
that there are sufficient funds of the Ponzi scheme 
available to satisfy such claims. 
‘‘(4) WAIVER.—By accepting any security or 
cash from the trustee under this section, the indirect 
Ponzi scheme investor agrees to waive the right to 
sue the Ponzi scheme investor with respect to such 
security or with respect to the security that was the 
basis for such cash payment. 
‘‘(5) SECURITY VALUATION.—For purposes of 
this subsection, the value of a security shall be 
deemed to be the amount listed for such security on 
the last statement the indirect Ponzi scheme investor 
received from the Ponzi scheme investor before the 
trustee determined the debtor was a Ponzi scheme 
pursuant to subsection (a). 
‘‘(e) PROHIBITION ON DOUBLE PAYMENTS.—Securi-
ties delivered pursuant to subsection (d), and securities, 
or percentages of securities, which were the basis for cash 
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paid pursuant to subsection (d), may not be the basis for 
any other payment by the trustee or SIPC under this Act. 
‘‘(f) RECOVERY OF FUNDS.—The trustee of a Ponzi 
scheme may not seek to recover money, including profits, 
from any investor in the Ponzi scheme unless such inves-
tor— 
‘‘(1) was complicit in the Ponzi scheme; or 
‘‘(2) was registered, or should have been reg-
istered, with the Commission under the securities 
laws as an investment adviser, broker, dealer, or 
other person with a fiduciary duty to the customers 
or investors of the person. 
‘‘(g) NON-APPLICABILITY IF LAWSUIT FILED.—This 
section shall not apply to a claim filed by an indirect Ponzi 
scheme investor if such investor has filed a lawsuit against 
the Ponzi scheme investor, the Ponzi scheme, or the trust-
ee in connection with the securities that are the basis of 
such claim. 
‘‘(h) RETROACTIVE APPLICABILITY.—With respect to 
the appointment of a trustee made before the date of the 
enactment of this section, such trustee shall make the de-
termination required under subsection (a) not later than 
30 days after such date of enactment, and only if such 
trustee makes a determination that the debtor is a Ponzi 
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