Fairfield Group's funds sued over Madoff
Fairfield, which had $7.5 billion invested with Madoff, was sued in New York State Supreme Court on Friday.
Investors have sued Fairfield Greenwich Group hedge fund and Massachusetts Mutual Life Insurance Co [MMLIC.UL], the latest firms to face lawsuits for entrusting money to investment manager Bernard Madoff, accused of orchestrating a $50 billion fraud.
Fairfield, which had $7.5 billion invested with Madoff, was sued in New York State Supreme Court on Friday by two investors who claimed the group and its executives "failed to manage properly their investments and to carry out necessary due diligence that would have uncovered the massive Ponzi scheme."
Money manager and former Nasdaq stock market chairman Madoff, 70, was arrested and charged on Dec. 11 with securities fraud. Prosecutors say he confessed to running up $50 billion in losses through his Bernard L. Madoff Investment Securities firm in what would be one of Wall Street's biggest frauds.
Madoff is quoted in court documents describing the investment arm of his firm as "basically, a giant Ponzi scheme", one in which early investors are paid with the money of new clients.
Several lawsuits have been filed in federal and state courts since Madoff's arrest.
The lawsuit against Fairfield Greenwich Group said the investors, Pasha Anwar and Julia Anwar are residents of Illinois and owners of an equity interest in Greenwich Sentry LP and previously owned an interest in Fairfield Sentry Fund.
Representatives of the hedge fund could not immediately be reached for comment.
In a separate lawsuit on Monday, two investors sued in U.S. District Court in the Southern District of New York to recover losses from Massachusetts Mutual Life Insurance Co. The suit also names Tremont Group Holdings and Oppenheimer Acquisition Corp.
Tremont is part of the insurance group under its subsidiary that oversees tens of billions of dollars in Oppenheimer Funds.
The investors, Arthur E. Lange of Connecticut and Arthur C. Lange of New York, claimed the defendants "breached their fiduciary duties by failing to conduct adequate due diligence and/or ignoring numerous red flags" about Madoff's scheme.
Mark Cybulski, a spokesman for Mass Mutual, said the company believes the claims are without merit.
"Mass Mutual will vigorously defend itself," the spokesman said. "As a matter of practice we do not comment on the specifics of litigation."
Madoff is under house arrest in his Manhattan apartment and he has not formally responded in court to the charge in the criminal complaint.
The state case is Pasha Anwar and Julia Anwar v. Fairfield Greenwich, 603769/2008, New York State Supreme Court in Manhattan.
The federal case is Arthur E. Lange and Arthur C. Lange v. Massachusetts Mutual Life Insurance Co et al No. 08-11117 U.S. District Court for the Southern District of New York (Manhattan).
Reuters Last Mod: 23 Aralık 2008, 13:28