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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.
New York (HedgeCo.Net) – Over $84 billion worth of U.S. hedge funds shut down last year, compared to just $18.7 billion in 2007, according to the latest data published by Absolute Return Magazine, a unit of HedgeFund Intelligence. More than 200 funds closed up shop in 2008, with 20 percent or $16 billion of those assets deriving from Madoff feeder funds.
The largest fund closure was Fairfield Greenwich Group’s Fairfield Sentry fund, which once managed $6.9 billion in assets, and fed almost all of their investments to Madoff funds. The other major Madoff feeder funds that faltered included Tremont Group’s Rye funds, which once managed $3.1 billion and Kingate Management’s Kingate Global Fund which was worth about $2.7 billion.
The largest failure unrelated to the Madoff scandal was Drake Management, who was forced to close funds that once oversaw $4.7 billion. Citigroup’s Old Lane Partners, another Multi-strategy hedge fund founded by its Chief Executive Vikram Pandit, decided to liquidate after unimpressive returns and mounting write downs by the bank. It once managed $4.4 billion in assets.
Here are the top 10 hedge fund closures of 2008 according to Absolute Return Magazine:
1. Fairfield Greenwich Group, Fairfield Sentry
Madoff feeder fund
6.9 Billion
2. Drake Management, Global Opp, Low Volatility, Abs. Return
Macro/Multi
4.7 Billion
3. Citigroup, Old Lane Partners
Multistrategy
4.4 Billion
4. D.B. Zwirn, Zwirn Special Opp. Fund
Multistrategy
4.0 Billion
5. Tontine Capital Management, Tontine Capital, Tontine Partners
Equity Long/Short
4.0 Billion
6. Ospraie Management, Ospraie Fund
Commodities
3.8 Billion
7. Highland Capital Management, Crusader, Highland Credit
Reuters – One of the bizarre effects of Bernard Madoff’s alleged $50 billion fraud is that it has boosted the performance of one group of hedge funds when measured against their peers, industry insiders said.
At least one major index, the CS/Tremont equity market neutral index, has been distorted by the failures of three large funds or fund groups which were index components: Kingate, Fairfield Sentry and Rye Select.
"The values of these funds have been taken to zero and we have no plans to restate them, nor to create additional indexes which exclude these funds," said Elaine Bourke, an associate at Credit Suisse/Tremont Hedge Index.
DST International – One group of hedge funds has had its performance boosted in comparison to its peers as a result of the Bernard Madoff scandal, according to a number of industry insiders.
Due to the failures of three large funds or fund groups – Fairfield Sentry, Kingate and Rye Select – which were components in the Credit Suisse/Tremont equity market neutral index, the listing has been distorted.
As such, the surviving funds are able to claim they have outperformed the index’s benchmark, Reuters notes.
New York (HedgeCo.Net) – Investors in the hedge fund Fairfield Greenwich Group have sued the company after about $7.5 billion in potential losses stemming from ties to Bernard Madoff.
The investors claimed that Fairfield sustained “avoidable losses,” by not practicing proper due diligence and failing to manage their investments properly. The lawsuit, filed by Pasha and Julia Anwar in New York State Supreme Court on Friday, is one of many attempts lately to salvage some of the estimated $50 billion lost by Madoff through his infamous Ponzi scheme. The Anwars are residents of Illinois and had an interest in Greenwich Sentry LP.
Massachusetts Mutual Life Insurance is also facing a scrutiny from angry investors. On Monday, Arthur E. Lange of Connecticut and Arthur C. Lange of New York filed a lawsuit in the Southern District of New York, claiming that the company “breached their fiduciary duties by failing to conduct adequate due diligence and/or numerous red flags,” regarding their investments with Madoff.
Massachusetts Mutual has denied the claims and plans to “vigorously defend itself,” according to a spokesman for the company.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
