Suing Investors

In April, Fox appealed a U.S. District Court ruling that affirmed the Picower settlement. Like other investors who took more money out of the con man's brokerage than they put in, she wants the right to sue allegedly fraudulent Madoff investors for compensation. Picard's settlements bar them from doing that.

Picard has held back on distributing more money from the $2.3 billion fund for the con man's customers, not knowing if he must pay 4 cents on the dollar each to investors who lost $57 billion including profits, or about 13 cents to those who lost $17 billion of principal. The Supreme Court action yesterday settled that question.

Sympathetic Trustee

"I think the trustee is very sympathetic to investors and it will be at least a dime," or a total of $1.8 billion, that goes to investors from the current customer fund, said Joseph Sarachek, managing director of claims trading at CRT Capital Group LLC, which buys and sells distressed debt, including the Madoff brokerage's.

Larry Velvel and other investors -- including the owners of the New York Mets baseball team -- had asked the top court for a hearing after federal appeals judges in New York said in August it would be "absurd" to treat fictitious paper profits as real, upholding a lower court ruling. The investors argued that securities laws require Picard to use their account statements to calculate their losses, and compensate them accordingly.

The Mets owners dropped their appeal to the Supreme Court after settling a lawsuit against them by Picard.

Before conferring June 21 on whether to hear the appeal, the Supreme Court justices asked the U.S. Securities and Exchange Commission to file papers on whether Picard is using the right formula to compensate investors.

The SEC said he was. Moreover, the subject wasn't of great importance to the nation, and doesn't justify attention from the U.S.'s top court, the SEC said. In the past 18 years, only seven Ponzi schemes have been liquidated, it said.

SEC Filing

"Petitioners thus do not present an issue of recurring significance warranting this court's review," the SEC said in a May filing, made on its behalf by the U.S. Solicitor General, who supervises government cases before the high court.