Business

$125 million settlement reached in Madoff case

Bernard Madoff
Bernard Madoff Getty Images

Citco Group agreed to pay $125 million to settle investor claims that it contributed to billions of dollars in losses by failing to properly administer funds that ended up going to con man Bernard Madoff.

The settlement is one of the biggest with a custodian or administrator of a Madoff feeder fund. It requires a judge’s approval. Citco denied any wrongdoing as part of the proposed settlement.

Citco, which describes itself on its website as a “worldwide group of independent financial service providers,” was hired by Fairfield Greenwich Group, the biggest operator of feeder funds that channeled money into Madoff’s Ponzi scheme, to keep shareholders informed of the performance of their investments and to verify financial details of the fund, according to the lawsuit.

Citco knew that investors were relying on the company’s services and owed them “a duty of care,” according to the complaint.

Attorneys from the Fort Lauderdale and New York offices of Boies, Schiller & Flexner represented the plaintiffs.

“We are pleased that we have been able to reach a settlement with Citco,” Stuart Singer, a Fort Lauderdale-based attorney for the firm and co-lead counsel for the plaintiffs, said in a statement. “We believe this to be by far the largest investor class-action settlement with an administrator or custodian involved in the Madoff fraud.”

U.S. District Judge Victor Marrero’s approval of the settlement would leave units of PricewaterhouseCoopers as the only remaining defendants in the lawsuit. A trial over those claims begins Jan. 4 in federal court in New York City. Plaintiffs are seeking $1 billion.

The Citco deal would cap more than six years of litigation and negotiations that took place over two years, according to the settlement proposal filed Wednesday in Manhattan federal court.

Marrero approved an $80.3 million settlement between Fairfield Greenwich and investors in 2013. Fairfield placed about $7 billion with Bernard L. Madoff Investment Securities.

Almost 3,000 investors claimed a portion of the settlement amount paid by Fairfield Greenwich, David Barrett, a lawyer for the plaintiffs who also works at Boies Schiller, said in an interview. The Citco settlement, if approved, would probably cover about the same number, Barrett said.

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