Madoff Feeder Fund Settlement Falls Apart

Nov 22 2013 | 11:07am ET

A proposed $800 million deal between a major Bernard Madoff feeder fund and the court-appointed receiver in the case has collapsed.

The settlement between Kingate Management and Irving Picard foundered following the Justice Department's announcement that indirect Madoff investors—but not his feeder funds—would have access to a $2.35 billion fund that is not overseen by Picard. Picard's office was taken by surprise by the announcement, The Wall Street Journal reports.

Picard had reportedly assumed that the Madoff Victim Fund—overseen by former Securities and Exchange Commission Chairman Richard Breeden—would employ the same reimbursement methodology that he does, with only direct investors, including feeder funds, eligible for payouts. Instead, investors in funds like Kingate will have access to the money directly, rather than through Kingate, which had $1.73 billion invested with Madoff.

Kingate planned to sell its claims against the Madoff estate to Deutsche Bank after finalizing its settlement with Picard. Deutsche Bank, in turn, was in talks with hedge funds including Centerbridge Partners, Farallon Capital and Solus Alternative Asset Management, to resell those claims, according to the Journal.

But the value of such secondary claims immediately dropped in the wake of Breeden's move, putting the Kingate trades on hold.

"The forfeiture programs are not set up for hedge funds to have another asset class to trade," Breeden said dismissively. "They're set up to allow victims of a crime to recover a portion of their losses."

"I think the republic will survive [the Kingate settlement] having to restructure itself."


In Depth

Q&A: Executive Recruiter Talks Hedge Fund Closures, Hiring Trends

Dec 19 2014 | 6:58am ET

This year, hedge funds have been closing at a rate not seen since the financial...

Lifestyle

Cooper-Hohn Won't Contest Divorce Settlement

Dec 18 2014 | 9:51am ET

The ex-wife of hedge fund billionaire Christopher Hohn will not contest a divorce...

Guest Contributor

Alternative Investment Funds Face A Communications Imperative

Dec 19 2014 | 6:10am ET

A handful of the top alternative investment firms on both sides of the Atlantic...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

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.