Jan. 27 (Bloomberg) -- Bernard Madoff’s brokerage firm owed customers $600 million in stock it didn’t have on hand, Securities Investor Protection Corp. President Stephen Harbeck told Congress.

Investors sent the trustee unwinding the Madoff brokerage “several hundred” claim forms seeking to recover funds after regulators proved Madoff had obligations to clients, Harbeck told the Senate Banking Committee in remarks prepared for a hearing today on the Madoff case. SIPC may be ready to pay the first Madoff claims as early as next month, he said.

SIPC, a Washington-based group funded by member broker- dealers, acts as a trustee or works with court-appointed trustees to recover funds in missing-asset cases. SIPC’s funds cover securities and cash claims of as much as $500,000 per customer, including up to $100,000 in cash.

The trustee, Irving Picard, has collected $91.8 million of more than $830 million in liquid assets identified at the defunct brokerage, Harbeck said. Picard on Jan. 2 mailed about 8,000 claim forms to people who appeared to have invested with Madoff in the past year and others who appeared on at least one mailing list.

Madoff, 70, was arrested Dec. 11 and charged with securities fraud at federal court in Manhattan after allegedly telling his sons that his investment advisory business was a Ponzi scheme, in which early investors were paid with money from subsequent participants.

Claims

The clients included banks, hedge funds, charities, universities and wealthy individuals who have disclosed about $41 billion invested with Bernard L. Madoff Investment Securities LLC, according to a Bloomberg News tally of disclosures and press reports.

Harbeck said SIPC may be able to begin paying off “simple, straightforward claims as early as February.” It hasn’t been determined whether individuals or the funds they invested in will be entitled to coverage, he said.

“We don’t want to discourage individuals from filing claims based on the documents in their hands,” he said. “Anyone who believes they were wronged” should submit a claim, he said.

SIPC has $1.7 billion in assets, $1 billion in credit available from the U.S. Treasury and another credit line from several international banks. The group will use the credit “if necessary,” Harbeck said. SIPC’s board will meet Jan. 30 to discuss how claims will be treated, he said.

To contact the reporter on this story: Ian Katz in Washington at ikatz2@bloomberg.net

Last Updated: January 27, 2009 14:21 EST