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Compliance March 2, 2011
Madoff Trustee Goes After Tremont for $2.1B
Tremont Group Holdings faces a $2.1-billion lawsuit for allegedly missing warning signs about Bernard Madoff's Ponzi scheme.
Reported by Fred Schneyer
Reuters is reporting that trustee Irving Picard accused Tremont of missing “red flags” and “blindly relying on Madoff to drive their funds’ returns” for nearly 15 years, according to an amended complaint filed in the federal bankruptcy court in Manhattan.
The allegations were revealed after a group of funds affiliated with Tremont, which is part of Massachusetts Mutual Life Insurance Co., reached a $100 million settlement in separate litigation with former Madoff investors, according to the news report.
Tremont and its now defunct Rye Investment Management unit lost more than $3 billion of client money funneled to Madoff and his firm Bernard L. Madoff Investment Securities LLC. Picard alleged Tremont earned as much as $240 million in fees tied to Madoff, including more than $180 million in the six years before the fraud was uncovered in December 2008. The $2.1 billion includes alleged fraudulent transfers, fictitious profits and other sums, the amended complaint said.
“Our position is unchanged, which is that we acted capably and appropriately,” Tremont spokesman Montieth Illingworth told Reuters.