Fairfield Greenwich Group Misled Investors Re: Madoff Oversight

Madoff Feeder Fund, Fairfield Greenwich Group, Misled Investors about Due Diligence

Fairfield Greenwich Group, a Connecticut based hedge fund and one of Madoff's largest investors, is being accused of misleading its investors about the due diligence performed on Madoff's hedge fund. This is according to Massachusetts Secretary of State, William Galvin.

According to Galvin, there was a “profound disparity between the due diligence that Fairfield represented to its investors that it would conduct with respect to Bernard L. Madoff Investment Securities [BMIS] and the due diligence it actually conducted . . . [We] attempted to discern how Fairfield possibly could not have discovered the fraud during their 18-year relationship [with Madoff]. The answer is that they were blinded by fees, did not engage in meaningful due diligence and turned a blind eye to any fact that would have burst their lucrative bubble.”

Fairfield Greenwich Group investors were told the firm was conducting daily monitoring of Madoff Securities, when in fact they were getting that data 3-5 days later. However, it is unclear how important real-time trade data would have been considering Madoff was not actually placing any trades at all and was in fact running a massive Ponzi Scheme.

Investors Sue Other Hedge Funds Over Madoff Fraud

Investors Sue Fairfield Greenwich Group, Massachusetts Mutual Life Insurance, over Lack of Due Dilligence in Madoff Scheme


Among the casualties in the Bernie Madoff (BLM Capital) scheme are hedge fund Fairfield Greenwich Group and Massachusetts Mutual, the former of which is accused of failing "to manage properly their investments and to carry out necessary due diligence that would have uncovered the massive Ponzi scheme," by investors.

The lawsuit against Fairfield Greenwich Group was filed by Pasha Anwar and Julia Anwar of Illinois.

Massachusetts Mutual Life Insurance Company was sued in a separate case on Monday. The suit was filed by Arthur E. Lange of Connecticut and Arthur C. Lange of New York.

Also named in the suit against Massachusetts Mutual are Tremont Group Holdings and Oppenheimer Acquisition Corp.

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Fairfield Greenwich Group Profited from Madoff Scheme?

Fairfield Greenwich Group Makes More than $500 Million from Madoff Fund
Investors channeled to Bernard Madoff by hedge fund, Fairfield Greenwich Group, will likely lose the entirity of their $7.6 billion in investments and Fairfield Greenwich's directors probably lost $60 million of thier own funds in the scheme. However, Fairfield Greenwich may have made more than $600 million in management fees from those same unfortunate investors, the Financial Times reported today.

Estimates of the size of the losses from Madoff's ponzi scheme are between $30 billion and $50 billion. The SEC admits receiving a variety of warnings about Madoff including a 2005 report entitled "The World's Larges Hedge Fund is a Fraud."

Madoff's firm is formerly know as Bernard L. Madoff Investment Securities "BLM"