Reuters | Madoff feeder fund administrator Citco Group reaches $125mln settlement

Jonathan Stempel

To be or not to be?

NEW YORK, Aug 13 (Reuters) – Citco Group, a large hedge fund administrator, agreed to pay $125 million to settle claims it misled investors into investing with Fairfield Greenwich Group, the biggest operator of “feeder funds” for now-imprisoned swindler Bernard Madoff.

The settlement, made public on Wednesday, is thought to be “by far” the largest with an administrator or custodian related to Madoff’s fraud, according to Stuart Singer, a partner at Boies, Schiller & Flexner representing the investors.

Citco was accused of failing to properly monitor and value Fairfield Greenwich’s investments, more than $7 billion of which were sent to Bernard L. Madoff Investment Securities LLC.

The investors said they suffered big losses from Citco’s deception and negligence once Madoff’s Ponzi scheme was uncovered in December 2008.

Citco denied wrongdoing, court papers show. The settlement requires approval by U.S. District Judge Victor Marrero in Manhattan.

Andrew Gordon, a lawyer for Citco, declined to comment.

Citco operates in more than 40 countries and recently had about $152 billion of hedge fund assets under administration, according to its website.

In March 2013, Marrero approved an $80.3 million settlement between Fairfield Greenwich and its investors, of which $30 million remains in escrow.

PricewaterhouseCoopers LLP remains a defendant in the case. A spokeswoman for the auditor had no immediate comment.

Madoff, 77, pleaded guilty in March 2009 and is serving a 150-year prison term.

Richard Breeden, a former U.S. Securities and Exchange Commission chairman, oversees a $4 billion fund that will compensate Madoff feeder fund investors.

The plaintiffs’ three lead law firms also include Wolf Popper, and Lovell Stewart Halebian Jacobson. The three firms plan to seek fees of up to $37.5 million, plus $5.5 million for expenses, for the Citco settlement, court papers show.

The case is Anwar et al v. Fairfield Greenwich Ltd et al, U.S. District Court, Southern District of New York, No. 09-00118. (Reporting by Jonathan Stempel in New York; Editing by Alan Crosby)

Bron: Reuters

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