July 28, 2011
Madoff trustee in $1 billion settlement with Tremont
NEW YORK, The trustee seeking money for victims of Bernard Madoff's fraud announced a more than $1 billion settlement with Tremont Group Holdings Inc, which he had accused of missing warning signs of the Ponzi scheme.
Thursday's settlement raises the amount of money trustee Irving Picard said he has recovered for Madoff's victims to $8.6 billion, or roughly half the $17.3 billion lost by customers who filed claims. It requires court approval.
Picard has said Rye, New York-based Tremont, which is part of Massachusetts Mutual Life Insurance Co, was the second-largest "feeder fund" group that funneled money to Madoff from its own investors.
He had sued Tremont for $2.1 billion on February 28, accusing it of missing "red flags" and "blindly relying on Madoff to drive their funds' returns" for nearly 15 years.
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, whose liquidation is overseen by Picard.
The Tremont accord covers more than one dozen U.S. and foreign investment funds and their affiliates.
Once the more than $1 billion of settlement payments are released from escrow, Picard will allow more than $3 billion of customer claims related to the Rye Select and Tremont funds against the Madoff firm's bankruptcy estate.
The settlement "gives investors in our funds the potential to recover a substantial portion of their losses" from Madoff's fraud, Tremont spokesman Montieth Illingworth said in a statement. "Bringing this matter to a close, with proofs of claim preserved, was the best outcome."
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