The U.S. Labor Department sued four investment firms for allegedly failing to examine swindler Bernard Madoff's business practices before entrusting him with hundreds of millions of dollars in pension funds.
The U.S. Labor Department sued four investment firms for allegedly failing to examine swindler Bernard Madoff's business practices before entrusting him with hundreds of millions of dollars in pension funds.
Ivy Asset Management LLC, Beacon Associates Management Corp., J.P. Jeanneret Associates Inc., Andover Associates Management Corp. and their principals were named as defendants in a complaint filed today in federal court in Manhattan.
The suit was brought under the Employee Retirement Income Security Act on behalf of union-sponsored and single-employer benefit plans, according to the complaint. The Labor Department asked the court to order the defendants to “restore to the plans all losses suffered” as a result of fiduciary breaches by the defendants related to Madoff investments.
“These defendants chose their own financial interests over those of the plans whose assets they were duty bound to manage prudently,” Labor Secretary Hilda Solis said in a statement.
Madoff, 72, is serving a 150-year prison term after admitting to orchestrating the biggest Ponzi scheme in history. When he was arrested in December 2008, account statements reflected 4,900 accounts with $65 billion in nonexistent investments, according to Irving Picard, the trustee overseeing the Madoff bankruptcy.
‘Very Seriously'
“Ivy takes its responsibilities to its clients very seriously,” Craig Brown, a spokesman for the firm, said in an e-mailed statement. He said the firm had fulfilled its duty to those clients.
“This lawsuit relates to a non-discretionary advisory business, where Ivy provided information to professional investment advisers, who in turn chose how to use that information and how and where to invest their clients' assets,” Brown said.
Ivy is a unit of New York-based Bank of New York Mellon Corp.
In May, New York Attorney General Andrew Cuomo sued Ivy, along with its former chief executive officer, Lawrence Simon, and former chief investment officer, Howard Wohl, for allegedly misleading clients about Madoff-related investments. Simon and Wohl are named as defendants in the Labor Department suit.
Tab Rosenfeld, a Manhattan attorney who represents White Plains, New York-based Beacon and principals Joel Danziger and Harris Markhoff in other Madoff-related litigation, said by phone that he hadn't seen the Labor Department's complaint and couldn't comment on it. Rosenfeld also has represented Andover.
Brian Whiteley, a Boston-based lawyer who represents Syracuse, New York-based J.P. Jeanneret and its principals, John Jeanneret and Paul Perry, didn't immediately return a call seeking comment.
The case is Solis v. Beacon Associates Management Corp., 10-cv-08000, U.S. District Court, Southern District of New York (Manhattan).
