Dept. of Labor Sues Investment Firms Over Madoff Losses
On October 22, 2010, the United States Department of Labor brought suit in federal court in Manhattan against four investment firms for their alleged failure to properly evaluate Bernard Madoff’s business practices prior to investing hundreds of millions of dollars in pension funds with him.
The suit was brought on behalf of union-sponsored and single-employer benefit plan against Ivy Asset Management LLC, Beacon Associates Management Corp., J.P. Jeanneret Associates Inc., Andover Associates Management Corp. and their respective principals. The Labor Department seeks to have the court order the defendants to “restore to the plans all losses suffered” due to the fiduciary breaches by the named-defendants related to Madoff investments.
According to Hilda Solis, Labor Secretary, “These defendants chose their own financial interests over those of the plans whose assets they were duty bound to manage prudently.”
Madoff, 72, is serving a 150-year prison term for conducting the largest Ponzi scheme in history. At the time of his arrest in December 2008, he was responsible for 4,900 accounts with $65 billion in non-existent investments, according to the Madoff bankruptcy trustee, Irving Picard.
According to a spokesman for the Ivy, Craig Brown, Ivy satisfied its duty to its 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.