Shuttered BNY Fund Of Funds To Pay $210M In Madoff Deal

Nov 14 2012 | 11:36am ET

A defunct fund of hedge funds has agreed to pay $210 million to victims of the Bernard Madoff Ponzi scheme, which the firm allegedly suspected but did nothing about.

Ivy Asset Management, a division of BNY Mellon, struck the settlement with New York Attorney General Eric Schneiderman. Internal documents from the fund of funds, which BNY shut down in 2010 during the investigation that led to New York's lawsuit, show that the division had serious concerns about Madoff that they did not disclose to clients.

Ivy claims that it had quietly raised its concerns with investors and urged them to reduce their Madoff positions. Ivy clients lost some $236 million when Madoff's scam collapsed in 2008.

"Ivy Asset Management violated its fundamental responsibility as an investment adviser by putting its own pecuniary interests ahead of the interests of its clients," Schneiderman said. "Ivy deliberately concealed negative facts it uncovered in its due diligence of Madoff in order to keep earning millions of dollars in fees. As a result, its clients suffered massive and avoidable losses."

Schneiderman's office said that most client losses would be recovered.

The settlement also includes several other defendants, who have agreed to pay a combined $9 million.

For its part, BNY would not comment on the settlement, other than to say that it would not affect its fourth-quarter earnings.


In Depth

Q&A: Schroders’ Forest Discusses Multi-Asset Investments On Eve Of U.S. Launch

Jul 17 2014 | 8:05am ET

Global investment manager Schroders has $446 billion in assets under management, $...

Lifestyle

Einhorns Busts At WSOP, Finishes In 173rd

Jul 15 2014 | 10:48am ET

Greenlight Capital founder David Einhorn’s World Series of Poker won’t end at...

Guest Contributor

Common Risk Parity Misperceptions

Jul 16 2014 | 11:02am ET

Over the past few years, risk parity has become a component of most investors’...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    Jul 8 2014 | 10:48am ET

    The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…

Publisher's Note