Accused hedge fund fraudster Arthur Nadel has often been dubbed a “mini-Madoff.” But his alleged victims don’t have recourse to one avenue to recouping their losses enjoyed by those of Bernard Madoff.

The Securities Investor Protection Corp. isn’t covering losses suffered in the six hedge funds managed by Nadel, who allegedly ripped off investors to the tune of $400 million. But if the two men both ran Ponzi schemes, why are Madoff’s victims entitled to the SIPC payout, which maxes out at $500,000?

Because Bernard L. Madoff Investment Securities was a SIPC member firm and was registered with the Securities and Exchange Commission, while neither Nadel’s Scoop Management nor Valhalla Investment Partners, for which Nadel managed funds, are. And that’s partly because the SIPC only covers victims of a failed brokerage firm—Madoff’s firm had a brokerage are—and not investment frauds.

“We don’t protect anyone against a decline in value of what they invested in,” SIPC CEO Steven Harbeck told the Sarasota (Fla.) Herald-Tribune. “If people who have invested in this hedge fund invested in something that has gone down in value because of fraud, SIPC would not be involved.”

That’s true even though Nadel’s funds may have claimed their investors were covered by the SIPC. According to the private placement memoranda for Nadel’s hedge funds, because their prime broker was registered with the SEC, each customer account “maintained on the books and records of the prime broker is insured within the prescribed limits by the Securities Investor Protection Corp.”

But the SIPC says it has not been called in by the SEC, and hasn’t even received any requests for help from Nadel’s alleged victims.