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Pensions and Investments – Fairfield Greenwich agreed to pay about $8 million to settle charges leveled at the hedge fund-of-funds manager by William F. Galvin, Massachusetts secretary of the commonwealth, in connection with the Madoff Ponzi scheme.
In settling, Fairfield Greenwich neither admitted nor denied the charges made in the Massachusetts’ Securities Division’s administrative complaint, which was filed April 1. Those charges alleged that the company failed to conduct due diligence on Bernard L. Madoff Investment Securities and later misrepresented its due diligence practices to investors in its hedge funds of funds, according to documents on Mr. Galvin’s website. As part of the settlement agreement, Mr. Galvin’s office dropped fraud charges that were included in the original complaint.
Greenwich Time – Fairfield Sentry Ltd., seeking to recover more than $919 million in fees related to investments involving Bernard Madoff, sued the Fairfield Greenwich Group hedge fund that lost $7 billion in Madoff’s fraud.
Fairfield Sentry, based in the British Virgin Islands, said in a complaint filed May 29 in New York State Supreme Court in Manhattan that it is the largest victim of the fraud perpetrated by Bernard Madoff.
The fund seeks to recover more than $919 million in investment management and performance fees that it paid to Fairfield Greenwich based on inflated net asset value reports of its investments with Bernard L. Madoff Investment Securities LLC.
Fairfield Greenwich, led by Greenwich resident Walter Noel, claimed it had $16 billion of assets under management, $7.3 billion of which was purportedly in Fairfield Sentry Ltd., according to the complaint.
Newsinferno.com – Bernard Madoff trustee, Irving Picard, has sued three Fairfield Greenwich Group hedge funds—Fairfield Sentry Ltd., Greenwich Sentry LP, and Greenwich Sentry Partners LP—in a clawback suit that seeks the return of $3.54 billion to repay victims of Madoff’s historic Ponzi scheme, said Bloomberg News.
Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the NASDAQ stock exchange ran an investment advisory business (Bernard L. Madoff Investment Securities LLC, or BLMIS), for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $64 billion, but in reality, it only held a mere fraction of that amount.
Boston Globe – The trustee liquidating Bernard Madoff’s defunct money-management firm sued three Fairfield Greenwich Group hedge funds, seeking the return of $3.54 billion withdrawn before Madoff’s massive fraud unraveled.
The trustee, Irving Picard, filed the so-called clawback lawsuit yesterday in federal court in Manhattan, seeking damages that would be used to repay victims of a $65 billion Ponzi scheme at Madoff’s New York-based money-management firm.
Starting in 1995, the Fairfield funds invested about $4.5 billion with Bernard L. Madoff Investment Securities LLC, or BLMIS, through 242 wire transfers, Picard said in the complaint. The funds are Fairfield Sentry Ltd., Greenwich Sentry LP, and Greenwich Sentry Partners LP.
Reuters – Nicola Horlick’s boutique fund manager Bramdean Alternatives said on Thursday it has received an approach for a possible takeover by an unnamed bidder.
The manager said in a statement: "The Board announces that it has received an approach which may or may not lead to an offer being made for the entire issued share capital of the Company."
At the end of last year Bramdean, headed by well-known fund manager Horlick, said it had an exposure to Bernard L. Madoff Investment Securities representing 9.5 percent of its net asset value at the end of October.
Albany Times Union – A group of upstate unions claims it lost nearly $1 billion in pension and other benefit funds after an investment manager placed the money with Bernard Madoff Investment Securities LLC.
Now, the unions have filed a class-action lawsuit against the adviser, Syracuse-based J.P. Jeanneret Associates Inc. and against White Plains-based Beacon Associates Management, which operated funds that invested pension money with Madoff.
New York (HedgeCo.Net) – Peter Madoff, brother of convicted Ponzi schemer Bernard Madoff, had his assets temporarily frozen by a New York State Judge yesterday. The Chief Compliance Officer of Bernard L. Madoff Investment Securities LLC was sued by an investor who lost almost half a million dollars in the master fraud committed by his brother.
The plaintiff, Andrew Samuels, entrusted Peter Madoff with an inheritance of $470,000 in which Peter, who was the sole trustee from 2003 to 2008, took and invested with his brother. When the scam collapsed and Samuels realized all of his money was gone, he contested that Peter breached his fiduciary duty.
New York State Supreme Court Justice Stephen A. Bucaria froze the assets until the next hearing on April 3rd.
Despite the massive $50 billion fraud that Bernard Madoff masterminded for decades, no other employees of the firm or subsidiaries have been charged with any wrongdoing.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (Hedgeco.Net) – Bernard Madoff was finally promoted from house arrest to maximum security prison, after pleading guilty to the largest Ponzi scheme in history. Madoff, who swindled an estimated $65 billion out of the most elite investors, could face up to 150 years of prison.
“I operated a Ponzi scheme through the investment advisory side of my business,” Madoff admitted to U.S. Judge Denny Chin at the hearing, referring to Bernard L. Madoff Investment Securities LLC. He did contend that his U.K.-based affiliate, Madoff Securities International along with the units run by his two sons were all legitimate entities.
“I am actually grateful for this opportunity to publicly speak about my crimes, for which I am so deeply sorry and ashamed,” Madoff confessed in the Manhattan courtroom. “I knew what I was doing was wrong, indeed criminal.”
Madoff spent years building up a stellar reputation with the rich and famous, many of whom invested their life savings with him. Madoff told the judge he started feeling pressure in the early 90’s to deliver the consistent returns that his investors expected. This jump started the staple Ponzi scheme action of using new capital coming in to pay returns to existing investors.
Instead of investing in securities like he promised his clients, Madoff instead deposited their cash into an account at Chase Manhattan Bank, where he would withdraw funds as needed for investor redemptions.
“I believed it would end shortly, and I would be able to extricate myself,” he said of the scheme. “As the years went by, I realized that my arrest and this day would inevitably come.”
Madoff’s sons have not been charged with any wrongdoing, nor have any employees at his New York City headquarters although investigations are still in the works. Attorneys for Madoff’s wife, Ruth, state that she was the sole owner of their Manhattan apartment, along with $17 million in cash and $45 million in bonds.
Madoff’s attorney, Ira Sorkin said he would appeal the jailing before his sentencing hearing on June 16.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
Reuters – Top former Merrill Lynch executives, including two former CEOs, invested in hedge funds that lost money with alleged fraudster Bernard Madoff, becoming the highest-level Wall Street victims of the scandal to date, the Wall Street Journal reported on Thursday.
Former chief executives Daniel Tully and David Komansky and former investment-banking chief Barry Friedberg personally invested in the funds, set up by former Merrill brokerage chief John Steffens, the paper said, citing people familiar with the matter.
Bernard L. Madoff Investment Securities LLC collapsed after the 70-year-old Wall Street trader was arrested and charged on December 11 last year with securities fraud.
Madoff, a former chairman of the Nasdaq stock market, is under house arrest and 24-hour surveillance in his luxury Manhattan penthouse apartment as criminal and civil investigators probe his global operations that purportedly lost $50 billion.
The firm comprised a brokerage and an investment division that Madoff ran separately in the same New York building.
MSN Money UK – Bernard L. Madoff Investment Securities LLC was examined at least eight times in 16 years by the U.S. Securities and Exchange Commission (SEC) and other regulators, who often came armed with suspicions, the Wall Street Journal said.
SEC officials followed up on emails from a New York hedge fund that described Bernard Madoff’s business practices as "highly unusual," the paper said.
The Financial Industry Regulatory Authority, the industry-run watchdog for brokerage firms, reported in 2007 that parts of the firm appeared to have no customers, according to the paper.
Madoff was interviewed at least twice by the SEC, the paper said, adding that regulators never came close to uncovering the alleged $50 billion Ponzi scheme that investigators now believe began in the 1970s.
Munster Times – Investigators may get a clue Wednesday into how much money might be available for victims in the Bernard Madoff scandal.
The fallen investment guru is scheduled to submit a list of his personal assets to the Securities and Exchange Commission by the end of the year, including property that could be tapped to make restitution to victims of what authorities say was a $50 billion Ponzi scheme.
In a previous court hearing, Madoff also agreed to provide the names and locations of entities, bank accounts, brokerage accounts, investments or assets held by his business, Bernard L. Madoff Investment Securities LLC.
New York (HedgeCo.Net) – As the investigation continues into what has turned out to be the largest fraud in history, more and more investors are coming forward who saw the red flags early, refusing to do business with Bernard Madoff.
According to a report published by the Independent, investigators are now hearing stories from many banks and investors who believed early on that Mr. Madoff had been faking his stellar track record. These investors complained to the Securities and Exchange Commission, only to have the agency merely give him a slap on the wrist.
According to a complaint sent to the SEC in 2005 by Boston accountant Harry Markopolos, a few hedge fund managers who did business with Madoff Investment Securities were weary that Madoff was “eating the losses” and doctoring returns.
Markopolos also allegedly warned the SEC that Madoff was in fact, running a giant Ponzi scheme. This of course, turned out to be the case when he was arrested last week after confessing to his sons that Madoff Investment Securities was essentially “one big lie,” and had bilked about $50 billion out of trusting investors.
Other red flags included the fact that his returns were steady and always on the up and up, posting returns of over 10 percent a year, while most legit funds experience some sort of down time. In addition, his company used a small, relatively unknown auditing firm whose list of clients was not very impressive.
The SEC forced Madoff to register as an investment advisor in 2006, which he did while avoiding further scrutiny. Investment advisors are not subject to routine SEC investigations; rather they are performed based on their potential risk.
Many believe he was able to evade investigations due to in part to his high-profile role on Wall Street. As one of the founders of the Nasdaq stock exchange, he regularly advised the SEC on electronic trading issues.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
