Sunday, 26 March 2017
Last updated 1 day ago
Apr 5 2010 | 11:52am ET
A hedge fund’s lawsuit against KPMG, the auditor of Bernard Madoff feeder fund Tremont Partners, has been dismissed.
U.S. District Judge Thomas Griesa in New York ruled that Meridian Capital Partners would have to show actual intent to deceive, manipulate or defraud investors to move forward with the lawsuit. He did not bar the hedge fund from refilling its complaint.
“Merely alleging that the auditor had access to the information by which it could have discovered the fraud is not sufficient,” Griesa wrote. He set the bar extremely high, warning Meridian Capital that it would have to show that KPMG’s audits of Tremont, which had more than half of its assets invested in Madoff, were so bad that they were essentially “no audit at all.”
A group of Meridan Capital funds sued KPMG a year ago, accusing the accounting firm of failing to investigate Madoff’s own accountant, David Friehling, who has pleaded guilty to producing phony audits of Madoff’s firm. The hedge funds said KPMG’s failure to do so led it to issue false and misleading audits of Tremont’s funds in 2006 and 2007.