Second Circuit Applies Federal Bankruptcy Law, Not Securities Law, In Madoff SIPA Liquidation

The Second Circuit applied federal bankruptcy law when holding that good faith is an affirmative defense.

14 minute read October 01, 2021 at 12:05 AM
By
Michael L. Cook
Second Circuit Applies Federal Bankruptcy Law, Not Securities Law, In Madoff SIPA Liquidation

"[L]ack of good faith in a SIPA [Securities Investor Protection Act] liquidation applies an inquiry notice, not willful blindness, standard, and that a SIPA trustee does not bear the burden of pleading the transferee's lack of good faith," held the U.S. Court of Appeals for the Second Circuit on Aug. 30, 2021 in In re Bernard L. Madoff Investment Securities, LLC, 2021 WL 3854761, 91 (2d Cir.

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