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Legal Update

United States Court of Appeals for the Second Circuit Holds that Section 546(e) Safe Harbor Protects from Avoidance Transfers of Fictitious Profits in Connection with Madoff Ponzi Scheme

11 December 2014
Mayer Brown Legal Update
The United States Court of Appeals for the Second Circuit has affirmed a lower court ruling in In re Bernard L. Madoff Investment Securities LLC refusing to claw back transfers of fictitious profits made to customers in connection with a Ponzi scheme. The decision reaffirms the Second Circuit’s broad and literal interpretation of section 546(e) of the Bankruptcy Code, which provides a safe harbor for transfers made in connection with a securities contract that might otherwise be attacked as preferences or fraudulent transfers.


  • Brian Trust
    T +1 212 506 2570
  • Richard G. Ziegler
    T +1 312 701 7894
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