Madoff Feeder Merkin Loses Arbitration, Ordered To Pay $12.7M

Sep 8 2010 | 9:39am ET

A pair of investors was awarded nearly $13 million by arbitrators in their case against Bernard Madoff feeder fund mogul J. Ezra Merkin.

Rosewood, N.J.-based Sandalwood Debt Funds A and B had accused Merkin, who ran three Madoff feeder funds, of common-law fraud, breach of fiduciary duty and negligent misrepresentation. The arbitration panel, which held six days of hearings in May, did not explain its decision to grant the Sandalwood funds the award.

Sandalwood Fund A was awarded $2.1 million and Fund B $10.5 million. Merkin—the sole respondent to the claim—was also ordered to pay $112,000 in fees. Sandalwood has asked a New York state judge to confirm the arbitrators’ decision.

The Sandalwood funds invested in Merkin’s Gabriel Capital Corp. Merkin has also been sued by New York Attorney General Andrew Cuomo and the court-appointed receiver in the Madoff case, Irving Picard. Cuomo accuses Merkin of investing much of his funds’ assets with Madoff without informing clients, claiming he reaped nearly $500 million in fees under the arrangement.

Madoff himself is serving a 150-year term for running the $65 billion, multi-decade Ponzi scheme.


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

The London Whale saga is a twist on the typical rogue trader story as the rogue trader recognized the error of his ways and was prepared to take his medicine but was instructed by superiors to “defe...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.