When the world learned on Dec. 11, 2008 that Bernie Madoff had masterminded the biggest Ponzi scheme in history, the news had ripple effects far beyond the offices of his New York-based brokerage firm.
The scheme’s collapse also forced “feeder funds,” investment funds that acted as conduits to Mr. Madoff’s firm, into liquidation, causing billions of dollars in losses.
That task has prompted an extensive legal battle, attempts to “claw back” funds from feeder fund investors, and settlement talks with Irving Picard, the United States trustee liquidating Bernard L. Madoff Investment Securities, the brokerage firm.
The legal fight involving the Fairfield liquidators’ right to make claw-backs from investors who withdrew before the scheme’s discovery is ongoing, said Ken Krys, whose firm KRyS Global is liquidating the Fairfield funds.
That approach prompted objections from some of the “net winners,” especially large institutional investors, and a lawsuit against the Fairfield liquidators. Lawyers from the VI offices of four law firms representing the net winners successfully argued before the Commercial Court and later the Eastern Caribbean Supreme Court of Appeal that the claw-backs shouldn’t be allowed.
The London-based Privy Council, the VI’s highest court, has agreed to hear the case next year, Mr. Krys said.
See the Aug. 15, 2013 edition for full coverage.