Hedge Fund Lawsuit Against Madoff Feeder Fund Auditor Fails

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.

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...