of the
and
the
一
We're were
contemplating the
record. Founding that ducks
whether the district,
got him,
that the net investment as a
matter of law for calculating
the net equity in
appellants, buying a hold
the net investment method
should be rare because it
wipes out a customer's entire
investment history. The court
approved the use of the net
investment method in that case
only because of this
extraordinary facts. The very
first fact that case. I mean,
this is part of the same
case. The net investment method
that we seem to apply here that
being the fact that these
sales were not actually made.
We're talking about fictitious
amounts fictitious statements.
And so that what made that case
unusual is the same thing that
makes this one unusual and not
one where it seems like the
last thing that would be
appropriate.
And so that's the case that
we're dealing with. The fact
that we're dealing with one
Ponzi scheme, both involving
Bernie made off is not
dispositive that the that other
than the net equity decision,
the case that is most similar
to the at bar is the New Times
case that also was a Ponzi
scheme that also and in that
case, civic and the civic
trustee, the other one, the
other one, the other one, the
other thought they were buying
real securities that never
were actually purchased. And
the civic and the civic trust
he applied the net investment
method to the first class of
customers and applied the last
statement method to the second
class of customers, which now
leads to so the point is that
even within one Ponzi scheme,
there's a different method
applied to the second class of
customers where there's
different methods applied. And
that's what we're urging here.
And this leads into the second
issue that the second class of
customers in the New Times
case. Also, we're in a
situation where securities
were never actually purchased.
The the the so that treatment
was not actually purchased.
So the second issue that the
second court endorsed or cited
approvingly by this court in
the net equity decision. It
specifically cited the
language from that decision
that said that the accounts
gave its mirror. What would
have happened had the
transactions been executed.
Meaning it was understood that
the securities weren't
actually purchased. So the
question is, is it a
question that is not
dispositive nor is it
dispositive that securities
weren't actually purchased on
that question. That it's not
just that the. New Times case,
the case I was referring to
the 2 class of customers
credited customers who with
respect to purchase it with
respect to securities never
purchased. It's fundamentally
part of the reason I'm stuck
on this is some of it is a
simplicity knowing that this
is an impossible thing to
administer such that
everybody's interests are
going to be maximized. And in
the event that it is going to
be extraordinarily difficult
to step into the shoes of the
customer. And that's why I
think it's important to be
able to make these fine
gradations that you want like
this. I understand why your
client wants this. But at some
point, we needed to have an
administrative system that
works for everybody. And the
the the decision to use the
net equity method contemplated
to important facts. One, it
was a fine distinction.
And the other was that the
net equity method weren't
actually transacted. Well,
first of all, with respect to
the notion that that we're
proposing a fine distinction.
What we're proposing is
adherence to the language in
the net equity decision itself
on the treats it as a separate
case. One that should be that
may be appropriate for last
year's net equity decision.
And that's what we're
proposing. It was that it was
dictated. Well, it it was
dictated, but it was
fundamental to the logic of
the decision and to the whole
to the to the line of cases
from which that decision came
that don't forget that that
when the court was deciding the
net equity decision, it had to
deal with the fact that
another Ponzi scheme 7 years
ago, the net equity decision
was that it was a fine
distinction. And it was
clearly in mind that there's
there are 2 different
treatments that it had to
consider one treatment when
everything's a fraud,
everything's fake. And this is
going to get into the the
sort of second part of of your
question that I wanted to.
This court has never approved
the
statement that the court
had to make that state off.
Right? I mean, you want some
exceptionalism for you when
we're talking about a massive
fraud that infected numerous
areas. And at some point,
there needs to be something
that is in the Okay. Well,
I'll get to a minister will in
a second. But what I do want
to say is that this court has
dealt with 2 Ponzi schemes and
that in both of those 2
precedents iscaled scam across
their
complaints,of asurand
which
that the customer authorized
questions of law. So the first half of what I want to say is that this case is not controlled
by the net equity decision. In fact, even Judge Keenan, when deciding whether or not
to impose prejudgment interest, said it wasn't controlling case law. This is a different
case. It's a unique case. And let's not forget that the net equity decision itself says no
one size fits all and that differing facts will inevitably call, quote unquote, for different
approaches to net equity. So we have to be case specific to your question about administrability.
What happened in the two cases in which the court applied the net investment method was
that it was total fraud and total fiction in the sense that the customer had no entitlement
to profits. This was just two fraudsters who sat in a room and out of thin air said,
this is the amount of profits I'm going to arbitrarily allocate to customers. And so
the court said, use this extreme method of the net investment method to wipe away all
profits only because there were no profits. Now, to the extent that when you're dealing
with customer authorizations and directions, you have to start to make distinctions, as
your honor is pointing to. First of all, that happens all the time. That happened in the
Stratton-Oakmont case. That in that case, the customers had actually, that the, came
before the trustee and said, hey, these stocks of mine were sold. I never authorized those
stocks to be sold. And so what the trustee had to do, presumably, was interview thousands
of customers and prove a negative, which is, hey, did you actually authorize the sale of
these stocks or not? And the trustee ended up concluding that the sales were unauthorized
and reversed the transactions. So the point is, making a decision about whether a customer
authorized or didn't authorize something is not unadministrable. It's been done. But even
if in theory we might say there's an administrability problem, we are so far away from that here.
The counsel for the trustee in oral argument in the net equity case acknowledged that
the, the SIPA mandates that the trustee do a complete and thorough investigation. Here.
Tell me what the standard review is with respect to using of the net equity. Well, the district
court found that the net investment method was superior as a matter of law. That was
quoting language from this court and the net equity decision that the net. But didn't they
find it was because the sage accounts did not reflect trades. So I'm trying to face
so it is your position that this is, this is something we review new de novo because
it's a question of law. Well, the overall question of whether or not the net investment
method is superior to the last statement method is clearly a question of law. District court
framed it as such. And so did the, the, this court in the net equity decision, the district
court just quoted from that language. So yes. And the, the, the, the court, this court in
the net equity decision said that it was going to do an independent review and that's what
this court should do, do an independent review. Now that's not to say that there might not
be factual questions embedded underneath. And so it may be that you, that you, in some
case you might say, well, the question of whether there was authorization or direction
with respect to all the transactions was a factual question, but here the district court
applied the wrong legal standard that it imported this notion that somehow to authorize. I want
to, I just want to be very fine on this because I think this is central. If the reason the
district court use the net investment method was because it found that the sage accounts
did not reflect authorized trades or were not directed by Malcolm, which you think is
the dispositive language separating this, is that no longer a pure question of law?
What I was about to say is I think that there's still, that there's a, that, that, that was
a legal conclusion when the, because it was interpreting the language of the net equity
decision, the language that we're relying on mainly that says where customers authorize
or direct the court had a, had a take on that language and the court's take on that language
was well, a customer only authorizes or directs within the meaning of the, of the net equity
decision if it actually gives specific instructions as to timing and price. And that was just
clearly wrong. First of all, it's just not what the language says. It says authorize
or direct purchase of securities. It doesn't say purchase of securities on particular dates
or at particular prices.
But isn't the nature of the whole fraud here, the whole scam had to do with timing, right?
So here I understand what you're saying, but the whole, the whole problem with this investment
scheme had to do with the backdating and the timing of things, right? So here in this context,
doesn't it matter whether someone said, Hey, make sure to buy me some stock in Coca-Cola
or I want to buy on, on Tuesday morning.
My short answer is no, it doesn't matter in this case backdating or the timing, as you
put it, mattered in the net equity case because looking backward at historical price information
allowed made off to designate stocks, quote unquote, from the net equity decision to engineer
desired results. But made off here didn't designate stock, whatever stocks he chose,
rather the appellant told made off what stocks he could buy. That's what matters here. And
that's what the key, that's the key thing that distinguishes this case from the net
equity case that made off fabricated account statements using backdating or any other means,
try to make it look like he actually had engaged in the transactions or executed the transactions
that were authorized or directed by my client. Doesn't negate the fact that my client authorized
or directed the transactions. It's, it's, in some sense, it goes back to the legal standard
question. It's kind of a non sequitur. The question is, did my client tell made off what
stocks he could buy or not? And, and, and if he did, which the evidence overwhelmingly
shows the fact that it took them a couple of weeks because they were fraudsters sitting
in a back room and they actually hadn't purchased the securities and they would enter the date
instead of when, if it was authorized on April 14th, they waited till May 1st and they wrote
it in. That doesn't mean anything for purposes of the net equity analysis. It doesn't mean
that the trades weren't authorized or directed. And it doesn't mean that the profits were
raised. It doesn't mean anything that goes to the issues at hand. The what, what I want
to emphasize is that the, I think that a clear way to think about this because it's obvious
that the, that your honors are sort of troubled by the fact that there's a Ponzi scheme and
there was so much fraud and how can we wade through it? What I wanted to just sort of
say two things first back to the administrative ability point, but then it's a step back thing
on the administrative ability thing. This trustee, even though it had a mandate to do
a complete and thorough investigation, did not do the following that the, the expert,
the trustees expert did not offer an opinion as to whether or not the sage associates account
had consistent positive returns. Even though that was a fundamental aspect of the net equity
decision. Fundamental aspect of that was that there was a rigged, steady and upward trajectory
in good times and in bad. The trustees expert didn't do a simple rate of return analysis,
even though he did it with split strike. He didn't do a volatility analysis with respect
to trying to compare the volatility in the account to market indices. So it's really
not, I think the right way with all respect to think about this, to say, well, it's really
hard to administer this when they did, they didn't do their homework. And what we're talking
about here, can I just step in? I couldn't, we're letting you go over a little bit, but
I just, aside from questions of an administer ability, there's a timeline, just a question
of equity and, and then the net net equity decision, part of what the court was concerned
about was what is a fair way to determine how these disbursements are supposed to be
made. And here, when we're talking about all of the trades are fictitious for those who
either purportedly directed it and for those who did not. And so the idea that we're going
to rely on which victim, none of whom had trades executed on their behalf, get more
than the one who is purportedly directing it, that that's a basis for making distinctions
that the principle of that, to my mind is not square with what net equity, the case
is saying, because what part of what this is about is how do we determine how to disperse
what is left here when you have a Ponzi scheme, when all of the trades are fake. And so this
this method that you're suggesting suggesting for making a distinction, to my mind, it just
has a serious to continue using the word equity problem. Okay, I'm going to give my headline
short answer and then I want to back up a little bit. The differences, the equitable
differences that with respect to the split strike customers, the entire thing was a fraud,
meaning they just contracted for a strategy that turned out to be a fraud. And so to have
said that they were entitled to profits would have been to legitimize the fraud here. We're
not asking you to legitimize the fraud. We're asking you to honor my clients authorizations
and directions. Those are the real things that the fake things is everything made off
the behind the scenes. The real thing is a real thing when the reality is the person
who gave $100 and said, let's do it. However, the person who gave $100 and said invested
in this company, neither of those, it's all fraud. They're both giving the same amount.
So the person who is more involved in the process deserves to get their $100 plus the
pretend thousand dollar profit. The person who gives $100 and didn't get involved is
not in time. They should just get their $100.
Well, let me try to unpack and see if this resonates with you at all. That the, when
as we split strike, the customer turns their money over to a broker and essentially says
little more than, Hey, make me money. When that and then when the broker just takes that
money and creates a total fiction, a total fraud, it's obvious that the customer should
get no credit for the fiction created by the broker. I mean, why should the customer get
credit there? That would just be to legit to legitimize the fraud. And if made up said
you get 12% doesn't mean the customer should get 12%. You'd be saying made off wins. He
gets to pick winners and losers as as judge Jacob said, net equity decision.
So as the court put it in the net equity decision, you cannot establish net equity based on a
fiction perpetrated by the fraudster. I kind of think that's what you're getting at. But
when a customer tells a broker, here's what I want you to do. I want you to buy these
stocks. The customer gets credit for the gains of those stocks, even if the broker doesn't
do what he was supposed to do and doesn't buy the stocks. While you can't establish
net equity based on a fiction, you can establish net equity. And that's what happened with
the real security claimants based on customer authorizations and directions, expectations
to use your word. And I'll come back to that. Even if a faithless broker doesn't execute
the authorizations and directions that putting here's one way to think of it. This is not
to credit what wasn't supposed to happen. This is not to credit the fraud. This is to
give credit for what was supposed to happen. This is what legitimate expectations is at
the heart of SIPA. And what legitimate expectations mean is that the customer generally expects,
this is the general rule, that they are going to receive what they believe is in their account
at the end of the day. It's all about expectations. The customer expects that they get their account
statements. Think of my client for 26 years receiving statements in the mail that track
his authorizations and directions. He's poring over them. And he has expectations that he
owns what's in his account. That's the normal rule. That's why the court said that in conventional
cases you apply the last statement method. And you don't typically wipe out all profits
over the course of 26 years. Because the point is that a customer can have legitimate expectations
even when it turns out the broker is a fraudster and didn't buy the stocks or didn't do something
else.
I'm going to ask you to wrap up. You have several minutes on rebuttal. So we'll hear
from your adversaries now.
Okay. Did you did you say that I should I should sit or that I should wrap up?
Good morning. May it please the court. Shauna Brown Baker, Hostetler on behalf of Irving
Picard, trustee. This court's net equity decision in 2011 is the foundational decision of this
entire liquidation. The rules that that decision set forth allowed the trustee to administer
this massive liquidation, including determining 16,000 claims filed against the estate. He
determined the net equity of over 4,000 made off accounts and also allowed him to bring
1000 avoidance actions to recover the fake profits that made up distributed to people
like Mr. Sage and others before the Ponzi scheme collapsed.
So may I ask I think there's a lot of evidentiary questions on this. But hypothetically, if
we find that Malcolm did direct and authorize the transactions for Sage for Sage Associates,
would there be a net equity method still be appropriate?
It would. And obviously, you're on. I'd like to address the directions and authorizations.
But the net equity decision tells this court how it has to look at the entire Ponzi scheme
because the the essence of made us fraud was priced in timing, meaning you have in the
record and Judge Keenan evaluated the credibility of the trustees witnesses at a five day bench
trial. He looked at all of the exhibits. Miss Bon Giorno, who worked for made up for over
30 years and work day to day on the Sage accounts, explained the fraud in great detail. She would
at months and not when customer called or talked about their accounts at the end of
the month, she would sit down with made up and they would figure out what stocks to purchase
and what volume and what prices had happened during the month that's going to allow them
to get the return that they want for the client. So what makes the this Ponzi scheme unique?
It's not that the transactions didn't happen like in new times. It's that they could never
have happened the way made off reported them. And I think Judge Keenan says it well on page
60 of the special appendix, which is the reported transactions were fictitious not only because
they did not occur, but because they could not have taken place. And the reason why I
answer your honor's question that way is because that's true whether you or a client was in
the buy and hold strategy like Mr. Sage or in the split strike that those facts permeate
the entire Ponzi scheme. And it was those facts that the second circuit relied upon
and reaching its determination that the net investment method was the only correct method
as a matter of law because otherwise you would give credence to Mr. Maydow's machinations
and allow people to recover fake profits at the expense of those who have not recovered
their principal. Okay. So does that so falling from that, does that mean the difference between
sage realty and sage associates is immaterial? So sage realty, yes, I would say it is. I
mean, I think sage realty was an easier case in some ways because it fell directly into
the split strike strategy. And so there was no question that the net equity decision governed
that the net equity decision is the only one that was considered correct. I will just say
that I think this is one of the first cases that I have had to say about that case. I
think this is the first time that we've had a buy and hold case come to this level of
review. I would like to know that you're not even you're not conceding that this was actually
a buy and hold that he actually directed, you're saying, assuming for the right, but
the liquidation. And he did
review the liquidation in the
early days of liquidation. He
did review both buy and hold
accounts as well as the
splitstrike. And what he found
is the splitstrikes. I'm sorry
the buy and hold was reserved
for made of friends, his
family members, his employees,
some of his longtime co
conspirators. These are people
who took out billions and
billions of dollars of
fictitious profits. And what
he found was that the net
investment method is the only
one that can apply. So if you
have no trading, you have no
profits from anything real.
It's just other customers
money. And so that's why I
think regardless of the
directions or the
authorizations, the net
investment method is the only
one that can apply. So I'd like
to turn to the the directions
and authorizations of Malcolm
Sage.
So Judge Kenan found that. And
I quote from page 46 of the
special appendix. The court
finds that the transactions
reflected in the stages,
customer account statements
were the product of made us
after the fact fabrications,
not the authorization
directions and authorizations
of Malcolm Sage. And I don't
think you've heard anything
from the court today. I think
that's a very important
point. And I think that's the
only thing here today that
says that Judge Kenan was
wrong, let alone that he was
clearly erroneous and reaching
those conclusions. And just
briefly to go through what
that was based on. He was
based on the testimony of a
net bond. You're now who
actually did the quote unquote
trades and Mister Sage's
accounts. She gave very
detailed testimony. I think
that's the most important
thing. And I think that's what
he relies upon and
determining that equity. But
he didn't just rely on the
testimony of someone who was
participating in the fraud. He
also relied on the testimony
of Bruce to been see his
expert who we the trustee
hired to assist the trustee
with many endeavors,
including establishing the
insolvency of the debtor and
investigating the entire fraud
case. And so that's the
most important thing. And I
think that's the most important
analysis of the witnesses and
the documents before him. But
even if let's say. Mister
Sage could establish that
Judge Kenan was somehow wrong.
I think that we have to focus
on what the one exception was
because Mister Sage conceded
that he left to made off the
money that he had in the
statement. And he was
thinking about buying Disney
on this day. He was thinking
about because he could look
back at the end of the month
and say, I'm going to buy
Disney on this day and get the
best price that he's looking
for. And then what happens
next is that those fake
profits get rolled over into
subsequent purchases. So that
by the time you go from 1985
to 2008, you have fake money
as a part of that. Last
western county.
If I can, just briefly
discussed New Times and
Straten, the 2 cases that were
I'm relied upon by my
the case, the case was
reported to be a fraud case.
And that was labeled with new
times, one and new times too.
And I don't this court has to
redo that. But the difference
between let's assume there's
some similarities between the
real securities that made up
purported to use in his fraud
and the new times, real
securities claimants. But the
difference in that case was
the amounts that were shown on
the statement, they weren't
this. It wasn't the product of
the fraud. It was the
product of the fraud. And
that's why I think that
Mr. Stratton, which is the
case that this court relied
upon and that that Mister
Sage relies on. Stratton also
doesn't help Mister Sage
Stratton is about a perch.
There was a purchase in
Stratton. And I think that
fact really distinguishes on
that case. So Mister Sage
can't fit into new times
because he's not a
customer. He's not a
customer. He's not a customer
that can actually make
actual purchases of
securities. And he can't fit
into the net equity decision
because just like the
split-strike customers, it was
the product of. Historical
backdated prices that were
rolled over into subsequent
purchases that ended in his
last statement.
And I think that's why I
think that's why I think
that's why I think that's why
the standard net equity
should be a superior method
for measurement. I think that
comes from that equity foot
note 7. It does. The
interesting thing about foot
note 7 is it's actually all
about discretion for the
trustee. And it says, look,
we don't need to worry about
that here because here it's
clearly superior. But the
standard net equity seems to
give us isn't clearly
superior. But I think it
says not clearly inferior.
And I think that's why I
think that's why I think
that's why I think that's why
I think that's why I think
that language from the
decision really addresses the
fact that there's no one size
fits all rule as we can see
from New Times and strat and
even the made up case. And so
I think the trustee he he
finds the books and records as
he takes the books and
records as he finds them. And
yes, you know, address the
fact that he's facing each
case. And I would point when
you're establishing your net
equity, you're not going to
have a record of the
record. You're going to have
a record of the record of the
trustee. That's in the
statute. And I think that
reflects the fact that a
trustee might not have all the
records. Some of those records
might be unreliable. But he
has to sort of look at all of
the records and do the most
fair thing for every customer
because the point of a simple
liquidation is that all
customers share equally. And
that means they share in the
recoveries equally and they
have to share in the pain
that they have to share in the
pain of the customer. But
there are thousands of people
who are in a similar position
and the trustee feels that he
must stand shoulder to shoulder
with everybody. He's not
unique in this case. There's
2 points. I see my time is
running out. There's 2 points
I want to address. I just want
to bring to the court's
attention that the trustee
did not do that calculation.
He did not deposit any
additional dollars into that
account. He withdrew $28
million over the course of the
account, 10 million of which
was withdrawn in April, 2008.
And the second thing I'd like
to address about the rate of
return analysis and my
adversary saying that the
trustee did not do that
calculation. I would note that
the trustee did not deposit
any additional dollars into
that account. And that's why
the discovery had closed.
Thank you.
It was the court. Nicholas
Hallenbeck on behalf of the
intervener, the security's
investor protection. I would
like to make 2 points about
round out trustee
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Mr.
No onto
trying to do a lot that first
you'll notice that counsel for
the trustee that a lot of time
talking about how the fraud
of years. But what this reinforces for me is that what we're dealing with here is it's the trustee
trying to put a square peg into a round hole. That this is not the same as the other case. It just
isn't. So let me give you an example. She said that the transactions could never have happened,
okay? Because that's a buzzword that comes up from the fake securities claimants. Those were
made up securities so they didn't exist. Or from the notion that the split strike scheme was
impossible because it was the volume exceeded what happened in the markets. But here, just think
about it. What my client said is, I want you to buy Disney. What do you mean that that couldn't
have happened? It could have happened. He could have bought Disney. It's that simple. It's the
square peg into a round hole problem. Okay, but that's a finding of fact though, right? And that
is something that the standard is pretty high for us to overturn, right? The district court
concluded that they were all fictitious. And to borrow the words of your colleague on the other
side, that it was merely taking money from one client and shifting it to another. Well, what
look fictitious fictitious could mean two things. Fictitious could mean the trades never happened.
That's not contested by us, but as we were talking about before, that's not dispositive.
It's not just that the net equity court relied on or cited approvingly to a instance in which
securities weren't purchased. It's just think about that decision. If the decision were,
we apply the net investment method automatically whenever securities are in purchase, that could
have been a one paragraph decision, right? It wasn't that the court had all this language about
no one size fits all. And it talked about, it was a cardinal fact. It was the first fact cited in
the statement of the case that split strike customers relinquish complete investment authority.
And then they included this language about what happens if a customer authorizes or directs. They
were wrestling with two different fact patterns. And so it's just wrong to say that the rule under
SIPA is that if there's no purchases, then that investment method applied. The court didn't say
that. They cited from page 46, the finding, and it goes to your point about a factual finding.
In that very, if you look at that specific quote unquote finding by the court, part of what it
relies on is my client's admission that he left discretion as to timing and price to made off.
So it's clear that the court was making what I described as kind of the non sequitur, which is,
I don't think a customer authorizes or directs a purchase if it turns out that three weeks later,
somebody enters it into a computer. That's still, that doesn't, as I said before, that doesn't negate
the fact that it was an authorized or directed trade. We have to get to the question of, does it
mean anything if it was entered three weeks late? And this is where we're into the administrability
problem and we're into burden of proof, which I'll get to in a second, which is so counsel for the
trustees said, well, price timing is the whole thing. That price and timing only matters if it
facilitates the fraud. In this case, there is no evidence that profits were rigged to reflect a
steady and upward trajectory like in the net equity case to the contrary. And that Bonior no
made office assistant acknowledged that there were losses in five separate years in the account,
square peg round hole. They're just citing things that were true of the split strike fraud and
thinking that they can just put it over into this case, but it doesn't, it doesn't fit deference.
The, this one, I think is a fairly easy one to address. The district court did not skate that
it was deferring to the trustee or to SIPC's view, nor has SIPC or the trustee argued in their briefing
to this court that they're entitled to deference. As such, the deference question hasn't been briefed
nor has it ever been decided by the second circuit as you were alluding to. Indeed, by my count,
this court has expressly refused to decide the deference question for separate times. I can give
you the cases if you want. But council, if you're going to come to us and tell us the question is,
is this method clearly superior? I'm trying to point out that that's where that comes from.
Doesn't necessarily support the idea that superior is the, is the test, right? That's footnote seven.
I assume you're not getting that the word superior from somewhere else. No, no. What? Well, footnote
seven says that even if we were to give some deference to the to the trustee that we it still
would never allow us to choose a clearly inferior method. That's the even if, but that's not what
the court decided. The court didn't say the standard was clear. That has to be clearly superior. The
standard is what the court found and what the district court found, which is which is superior.
It was an independent review and you should do an independent review too. The on terms of burden
of proof, I would suggest to you that that really you should think about it the opposite way. First
of all, half of this is an avoidance action and it's an important half. It's a half in which the
trustee 15 years after the fact by which I mean 15 years after the transactions in question after
after the end of the made off scheme is trying to claw back nearly 17 million dollars. So first of
all, they have a technical burden of proof in the avoidance action, but they have a burden in other
senses. They have the ability. They have the requirement to do a complete and thorough
investigation. We talked about that. That's a burden that they have. And they're also seeking
to apply a net equity methodology that's supposed to be used rarely in extraordinary circumstances
and they're seeking to apply it here in circumstances that are fundamentally different from any
circumstance in which this court has ever applied it and to and in doing so to wipe out any and all
profits of my client. That's a burden too. So rather than deferring to the trustee, you should
be asking them to prove why 17 million dollars should be taken away from my client and his family.
Let's talk about now. I have two last things to say. I'll do it quickly that in terms of the 22
million dollars, I don't know why that was mentioned except to perhaps suggest that somehow
there's something inequitable about the fact that my client put in 300,000 and ended up with 22
million. You don't need to be a rocket scientist to know or you don't need to be a market scientist
to know how many times somebody said if I had just bought Disney, if I just bought Yahoo 20 years
ago, I'd be a gazillionaire. You can Google it. I did. If you put $10,000 into the market in 1980,
you know what it would be worth today? Sorry, if you put it into the Dow Jones 500 in 1980,
it would be worth $760,000. Okay, so this notion that somehow, wow, this is a crazy number is wrong.
And here's what I want to end with. What kind of an Alice in Wonderland world are we in when Council
for SIPPIC stood up in the net equity oral argument and said the customer should get whatever his
account statement shows that reflects market reality. And then in a SIPPIC action, in this case,
a customer, my client, tried to show what was in his account statement aligned with market reality,
that there were losses over periods of time as the evidence shows and wanted to unpack that. And the
trustee for SIPPIC, the Securities Investor Protection Corporation, no less, says, no,
you can't do that. My client tried to offer simple charts that showed the performance of the account.
And the trustee said, no, no, you're not an expert. It's unreliable. But then perversely,
it didn't ask its own expert to calculate the rate of return of the Sage Associates account for even
a single year. Why did the trustee oppose putting before the judge the facts of the account's
performance? Presumably because they didn't like what they saw, which is that my client's charts
showed that in 126 out of 300 months that they count actually lost equity. A world of difference
from the split strike strategy. Yeah, I think we understand your thank you. Thank you. All of you.