UPDATE: While Picard may have lost the battle in the District Court’s HSBC ruling, the Second Circuit Court of Appeals handed him a significant victory yesterday as it affirmed the bankruptcy court’s approval of the use of Picard’s “net equity” method of reconciling customers’ claims. Instead of relying upon the balances in customers’ account statements, Picard’s method looked to how much money customers put into their accounts and how much money they withdrew from their accounts, without taking into account any “profits” on the funds deposited. Among other things, this method has been the foundation for Picard’s avoidance actions against customers who were “net winners” under this method, i.e., customers that withdrew more money from their investment account than they deposited. We will delve more deeply into the Second Circuit’s reasoning in a future blog update.
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