Wednesday, 7 October 2015
Last updated 17 hours ago
Jun 1 2009 | 10:35am ET
There are moments when the litigation in the Bernard Madoff case seems straight off the pages of a Kafka novel, and none more so than Friday’s move by one of Fairfield Greenwich Group’s Madoff feeder funds to sue Fairfield Greenwich itself.
The lawsuit, initiated by the directors of the Fairfield Sentry Fund, accuses its investment manager of charging fees based on “inflated net asset value reports of its investment with Bernard L. Madoff Investment Securities.” Fairfield Sentry, which itself is under fire from investors and others, styled itself “the largest victim of the fraud perpetrated by Bernard L. Madoff,” with losses of $7 billion.
Prior to the collapse of Madoff’s $65 billion Ponzi scheme in December, Fairfield Sentry managed $7.3 billion, nearly half the total managed by Fairfield Greenwich. Madoff pleaded guilty to fraud charges in March and is awaiting sentencing.
“The Fairfield entity defendants recklessly disregarded their duties as the fund’s risk and investment adviser and their actions and inactions constitute gross negligence,” the lawsuit, filed in New York state court in Manhattan, alleges. The suit also names Fairfield Greenwich founders Walter Noel and Jeffrey Tucker, as well as other partners at the firm, which last month agreed to give up control of four of its hedge funds.
The Fairfield Sentry directors are seeking more than $919 million in fees in paid to Fairfield Greenwich over the years.
Fairfield Greenwich rejected its flagship fund’s claims, calling it “part of a legal strategy intended to fend off multiple proceedings against it.”
“We understand that the directors of Fairfield Sentry are under attack on several fronts,” said Mark Cunha, a lawyer for Fairfield Greenwich. “Their lawsuit appears to be a defensive maneuver in connection with those attacks, and itself has no merit.”
Oct 7 2015 | 4:57am ET
Charity A Leg To Stand On (ALTSO) will hold its 12th Annual Hedge Fund Rocktoberfest – NYC on October 15 and its 4th Annual Rocktoberfest - Chicago on October 22. Read more…