Texas fund of hedge funds shop Austin Capital Management has been hit with a second class-action lawsuit over losses suffered in the Bernard Madoff Ponzi scheme.
A San Diego law firm filed the suit in New York federal court, accusing Austin and its outside auditors of breach of fiduciary duty for not telling investors that it had allocated some 7.5% of its funds to Rye Investment Management, a Madoff feeder fund. The suit, which is seeking a lead plaintiff, covers institutional investors for the period between 2005 and Madoff’s arrest last year.
In February, a Philadelphia pension fund filed a class-action suit against Austin in Philadelphia. Earlier that month, the Massachusetts Pension Reserves Investment Management Board fired the firm just four months into its contract due to the Madoff debacle.
Coughlin Stoia Geller Rudman & Robbins’ suit includes a sub-class for employee benefit plans, claiming breach of fiduciary duty under the Employee Retirement Income Security Act of 1974.
The lawsuit seeks to recover damages on behalf of all investors during the three-year period.
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