FRAUD VICTIMS OF BERNARD L. MADOFF INVESTMENT SECURITIES, LLC
Did you invest in securities directly through Bernard L. Madoff Investment Securities, LLC?
Have you or your company invested in a Hedge Fund that failed to perform its due diligence before investing with Bernard L. Madoff Investment Securities, LLC?
If you answered “Yes” to either of these questions, the attorneys at Frier Levitt, LLC can help you recover your losses.
I. Securities Fraud Charges Filed by SEC Against Madoff
II. Your Hedge Fund Manager’s Duty to Perform Due Diligence
IV. What is the Customer Asset Protection Company (“CAPCO”) and is Madoff a CAPCO Participant?
V. Who Is Frier Levitt And What Can Frier Levitt Do To Help Me Regarding My Madoff Losses?
VII. Can the SEC Receiver sue me for money I received as distributions or redemptions from Madoff?
VIII. How far back can the Receiver look to bring a claim against me or my Institution?
IX. What are my rights if the Receivership Estate files suit against me or my Institution?
X. An Alphabetical List of Banks and Hedge Funds Who Invested through Madoff*.
Documents Relating to
SEC v. Madoff
Complaint (U.S. Securities Exchange Commission v. Madoff)
Criminal Complaint (U.S. v. Madoff)
Order to Show Cause
Appointing Receiver
and Freezing Madoff
Assets
Order Appointing Trustee
and Referring Liquidation
Proceedings to the Bankruptcy Court
I. Securities Fraud Charges Filed by SEC Against Madoff
On Thursday, December 11, 2008, the Securities and Exchange Commission (“SEC”) charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC (collectively “Madoff”), with securities fraud in a multi-billion dollar Ponzi scheme perpetrated on Madoff’s clients. Madoff’s clients include several of the largest banks in Europe and numerous Hedge Funds.
The SEC’s complaint alleges that Madoff recently informed two senior employees that his investment advisory business was a fraud. Madoff told these employees that he was “finished,” that he had “absolutely nothing,” that “it’s all just one big lie,” and that it was “basically, a giant Ponzi scheme.” The senior employees understood him to be saying that he had for years been paying returns to certain investors out of the principal received from other investors. Madoff admitted in this conversation that the firm was insolvent and had been for years, and that he estimated the losses from this fraud were at least $50 billion.
II. Your Hedge Fund Manager’s Duty to Perform Due Diligence
When you invest in a Hedge Fund, you rely on your Hedge Fund professional to perform intelligent due diligence before your money is invested. If you are an investor in a Hedge Fund that sustained losses as a result of the Ponzi scheme perpetrated by Bernard L. Madoff Investment Securities, LLC, then you may have a claim against your Hedge Fund manager as a result of its negligence in failing to perform the appropriate due diligence before investing your money with Madoff.
A Hedge Fund manager’s due diligence (prior to investing your money in another Hedge Fund) entails performing an in-detail review of the Hedge Fund’s activity in order to ensure ultimately that the Fund is in compliance with its prospectus. As part of its due diligence, a manager typically looks into: (a) a snapshot of the Fund (i.e, how the Fund performed at certain discrete time intervals), (b) the disclosed investment strategy, (c) the historical returns of the fund, (d) the assets under management by the fund (i.e., the funds portfolio), (e) audited financial statements of the Fund, (f) the Fund’s terms and details, (g) the Fund’s regulatory registration information, (h) the disclosed risk factors of the Fund, and (i) a valuation of the Fund.
III. What is the Securities Investor Protection Company (SIPC) and are My Madoff Losses Covered by the SIPC?
The Securities Investor Protection Corporation (SIPC) was created in 1970 as a non-profit, non-government, membership corporation, funded by member broker-dealers. Its primary role is to return funds and securities to investors if the SIPC member holding these assets becomes insolvent. SIPC does not protect you against losses caused by a decline in the market value of your securities. While SIPC covers most types of securities, such as stocks, bonds, and mutual funds, not all investments are protected. In general, SIPC covers notes, stocks, bonds, mutual fund and other investment company shares, and other registered securities. It does not cover instruments such as unregistered investment contracts, unregistered limited partnerships, fixed annuity contracts, currency, and interests in gold, silver, or other commodity futures contracts or commodity options. For this reason, hedge funds are generally not covered by the SIPC. Bernard L. Madoff Investment Securities, LLC (“Madoff”) is an SIPC member. While investigators have not yet reached any conclusions regarding the mechanics of the Madoff “Ponzi scheme”, if the funds were stolen, direct customers who invested in securities through Madoff will likely be covered in an amount up to $500,000, including a $100,000 limit for cash (in accordance with SIPC guidelines).
IV. What is the Customer Asset Protection Company (“CAPCO”) and is Madoff a CAPCO Participant?
Investors who sustained an SIPC-covered loss may qualify for excess SIPC insurance coverage through the Customer Asset Protection Company (“CAPCO”), a licensed Vermont insurer. CAPCO was formed in late 2003 by a group of securities firms to provide securities account protection for institutional and individual brokerage accounts of certain securities firms over the protection limits currently provided by the SIPC.
Bernard L. Madoff Investment Securities, LLC is not a CAPCO participant. Thus, even if you directly invested in securities through Madoff and are, consequently, covered for your losses by the SIPC (up to $500,000.00), you would not be entitled to excess coverage through CAPCO.
V. Who Is Frier Levitt And What Can Frier Levitt Do To Help Me?
Frier Levitt, LLC is a law firm that successfully represents investors in individual and class action lawsuits and arbitrations before the Financial Industry Regulatory Authority (“FINRA”).
At Frier Levitt, LLC, it is our goal to provide you with superior legal representation and personal attention. Upon engaging us, we will immediately devise and begin to implement the most expeditious and cost-effective strategy to get back your hard-earned dollars. We will keep you informed every step of the way as we work together to achieve success.
While Frier Levitt, LLC is based in Northern New Jersey and New York, our experienced attorneys are licensed to practice law in multiple jurisdictions throughout the United States. Our New York office is in proximity to the FINRA headquarters and many major New York Stock Exchange (“NYSE”) member firms. Our success in litigating and arbitrating customer disputes against member firms has earned us their respect. This has proven very helpful in obtaining fast and successful results on behalf of our clients.
Frier Levitt, LLC welcomes the opportunity to serve you.
For more information about Madoff’s Ponzi scheme, your Hedge Fund manager’s duty to conduct due diligence, and whether/to what extent your losses may be covered by SIPC and CAPCO, or to discuss how Frier Levitt, LLC can assist you in obtaining legal relief against Madoff through the SIPC and/or your Hedge Fund, please call us at (973) 618-1660, or toll-free at (888) LEVITT1 (i.e., 888-538-4881).
VI. What Is Frier Levitt’s Litigation Strategy and Do Investment Advisors Typically Have Insurance to Investor Losses?
Whether you can recover your losses will depend on the availability of assets and insurance coverage. We believe the Madoff Fund assets will provide virtually no source of recovery. Our attorneys have researched the issue of whether Investment Advisors typically have insurance coverage that could provide a source of recovery. There is a type of Investment Advisor Errors & Omissions (E&O) Liability Insurance in the marketplace. This coverage is separate from Directors and Officers insurance, but potentially part of a suite of coverages for this class of business. E&O is a type of professional liability insurance for the professional services of an Investment Advisor. These policies typically cover Investment Advisors from any “actual or alleged losses or claims due to negligence, mismanagement of customer accounts, adverse performance, suitability, deviations from investment plans, breach of fiduciary duty, ERISA liability, misleading sales practices, administrative errors, and similar errors and omissions in rendering professional services to customers…” This language comes from just one specimen E&O policy we obtained and there may be variations of this language among different E&O policies. We are gathering information on many of the Hedge Funds and other institutions that lost money with Madoff to determine the types of coverage the Investment Advisors had in place. Call us to learn more.
VII. Can the SEC Receiver sue me for money I received as distributions or redemptions from Madoff?
The Court-appointed Receiver could file lawsuits against individual or institutional investors that invested in Bernard L. Madoff Investment Securities, LLC (“Madoff”). The lawsuits will seek payment of money the investors received when they redeemed all or a portion of their investment from these Hedge funds or by way of quarterly or annual dividends. The claims will be based on “fraudulent conveyances” and/or “preference” theories.
A fraudulent conveyance claim is brought under State law against an investor who received money from Madoff. A preference action is brought pursuant to Bankruptcy laws to recover money paid to investors while the debtor (Madoff) was insolvent. Even investors who redeemed their investment prior to disclosure of the Ponzi scheme will be subject to these claims.
VIII. How far back can the Receiver look to bring a claim against me or my Institution?
A Receiver can “claw back” under New York law for a period of six years. Under the Bankruptcy laws, the claw back period is two years.
IX. What are my rights if the Receivership Estate files suit against me or my Institution?
Our firm has significant experience defending fraudulent transfer and preference actions and we have obtained excellent results in such matters. We will review the lawsuit and review your individual circumstance to determine whether you have an affirmative defense to the lawsuit and the best strategy to obtain a positive result. Call us.
X. An Alphabetical List of Banks and Hedge Funds Who Invested through Madoff *
| Client | Total | Source |
| 1973 Masters Vacation Fund | ||
| Access International Advisors | $1.4 billion | Company statement, Bloomberg Data |
| Ascot Partners, LP | ||
| Banco Santander SA | $2.33 billion Euros ($3.1 billion) | Company statement |
| Banque Benedict Hentsch & Cie. SA | $48 million | Company statement |
| Benbassat & Cie. | $935 million | Reuters Citing Le Temps Newspaper |
| BNP Paribas SA | Up to 350 million Euros | Company statement |
| Boston philanthropist, Carl Shapiro’s charitable foundation | $145 million | Boston Globe |
| Bramdean Alternatives Ltd. | 9.5 percent of assets | Company statement |
| EIM Group | $230 million | Reuters Citing Le Temps Newspaper |
| Elie Wiesel Foundation For Humanity | Undetermined | Wall Street Journal |
| Fairfield Greenwich Group | $7.5 billion | Bloomberg News, Company Statement |
| Fix Asset Management | $400 million | Company Statement |
| GMAC LLC Chairman Jacob Ezra Merkin’s Ascot Partners LLC | Most of its $1.8 billion of assets | Wall Street Journal |
| Harel Insurance Investments & Financial Services Ltd. | $14.2 million | Company statement |
| HSBC Holdings Plc | $1 billion | Company statement |
| Julian J. Levitt Foundation | $6 million | Washington Post |
| Kingate Management Ltd. | $3.5 billion | Bloomberg News, Bloomberg Data |
| KML Asset Management, LLC | ||
| Korea Life Insurance Co. | $50 million | Yonhap News |
| Korea Teachers Pension | $9.1 million | Company statement |
| Madoff Family Foundation | $19 million | Washington Post |
| Man Group Plc | $360 million | Company Statement |
| Maxam Capital Management LLC | $280 million | Wall Street Journal |
| M&B Capital Partners | 137.4 million euros | El Mundo |
| Mirabaud & Cie. | A “few” million Swiss Francs | Reuters Citing Le Temps |
| Natixis | Up to 450 million Euros | Company Statement |
| Neue Privat Bank | $5 Million | Bloomberg News |
| New York Mets owner Fred Wilpon’s Sterling Equities Inc. | Undetermined | Company statement |
| Nomura Holdings Inc. | $302 Million | Company statement |
| Nordea Bank AB | 48 million Euros | Company statement |
| Norman Braman, Former owner of the Philadelphia Eagles Football Team | Undetermined | Wall Street Journal |
| North Shore-Long Island Jewish Health System | $5 million | Company statement |
| Notz, Stucki & Cie | Undetermined | Reuters Citing Le Temps Newspaper |
| Pioneer Alternative Investments | Almost all of its $280 million of assets | Bloomberg News |
| Robert I. Lappin Charitable Foundation | $8 million | Washington Post |
| Royal Bank of Scotland Group Plc | $360 million | Company statement |
| Reichmuth & Co.’s Reichmuth Matterhorn Fund | $330 million | Letter to clients |
| Sandalwood Securities, Inc. | ||
| Societe Generale SA | Less than 10 million euros | Company statement |
| Tremont Capital Management | Undetermined | Wall Street Journal |
| U.S. Senator Frank Lautenberg’s Charitable Foundation | Undetermined | Bergen Record, Bloomberg News |
| UniCredit SpA | 75 million Euros | Company statement |
| Union Bancaire Privee | # Less than 1.26 billion Swiss francs ($1.08 billion) | Company statement |
| Steven Spielberg’s Wunderkinder Foundation | Undetermined | Wall Street Journal |
| Yeshiva University | Undetermined | Washington Post and Statement |
| Mortimer Zuckerman | Undetermined | Wall Street Journal |
| Approx. Total: | 24.3 Billion |
* DISCLAIMER: THIS WEBSITE AND THE ABOVE LIST HAS BEEN MADE FOR INFORMATIONAL PURPOSES ONLY FROM INFORMATION OBTAINED IN VARIOUS NEWS SOURCES.
NOTHING HEREIN SHOULD BE MISCONSTRUED AS IMPLYING THAT THE LISTED ENTITIES HAVE ENGAGED IN MISCONDUCT.