Mass. Regulator Charges Madoff Feeder Fund |
Date: Thursday, April 2, 2009
Author: Svea.Herbst, ThomsonReuters.com
Massachusetts' top securities regulator
charged hedge fund firm Fairfield Greenwich Group with fraud for
allegedly lying to investors about confessed swindler Bernard Madoff's
phony management business.
The action on Wednesday [April 1] marks the first charges against one
of Mr. Madoff's feeder funds, which funneled billions of dollars into
the disgraced Wall Street legend's long-running Ponzi scheme.
William Galvin, Massachusetts' secretary of state, accused Fairfield
Greenwich, a prominent hedge fund firm in Connecticut, of failing to
check how Mr. Madoff generated the strong and steady returns he said he
made year after year.
"The allegations against Fairfield in this complaint outline a total
disregard for such [fiduciary] responsibility which helped the Madoff
scheme to stay afloat for so long," Galvin said in a statement.
Mr. Galvin wants Fairfield Greenwich to return the money that
Massachusetts investors lost in the scheme and return the performance
fees they paid the firm. He is also seeking an administrative fine
against Fairfield.
Fairfield Greenwich's Sentry Funds had placed about $7.2 billion, or
95% of its assets, with Mr. Madoff, whose fraud appears to have totaled
about $65 billion Previous Reuters Story.
Mr. Galvin found that Fairfield Greenwich insiders pumped $14.8
million into Mr. Madoff's business only days before the 70-year-old
former Nasdaq stock market chairman confessed to authorities that his
business had been a fraud.
Mr. Madoff, who was jailed on March 12 after pleading guilty, will be sentenced on June 16.
By Svea Herbst-Bayliss