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December 24, 2008

NYU sues Merkin over Madoff losses

http://www.jewishjournal.com/blog/item/nyu_sues_merkin_over_madoff_losses_20081224/

And here ... we ... go:

Hedge fund executive Ezra Merkin has been sued again for entrusting investments with confessed swindler Bernard Madoff, this time by New York University, which said it lost about $24 million.

The lawsuit in New York State Supreme Court is among a series against Merkin and other funds during the past week as investors seek to recover losses from the purported $50 billion Madoff scandal that would be Wall Street’s biggest fraud.

A judge issued a temporary order on Wednesday, barring Merkin from liquidating Ariel Fund Ltd, named in the lawsuit by New York University, which calls itself the largest private university in the United States.

The order, which expires on January 6, will have no impact on plans announced December 18 to wind down the Ariel fund, Merkin’s attorney Andrew Levander said in a statement. He said the investment manager would not receive fees and attorneys had promised to preserve documents.

“Mr. Merkin remains committed to obtaining for shareholders the best results possible in the wake of the terrible fraud committed by Bernard Madoff,” the statement said.

Madoff, a 70-year-old investment adviser and former chairman of the NASDAQ stock market, was arrested on December 11 and charged with securities fraud. Authorities said Madoff confessed to running a $50 billion Ponzi scheme in which early investors were paid off with the money from new clients.

He is under house arrest in his Manhattan apartment on $10 million bail.

Investors can also make claims for money lost with Madoff through the Securities Investor Protection Corp (SIPC), which is overseeing the liquidation of Bernard L. Madoff Investment Securities LLC via a court-appointed trustee.

A U.S. bankruptcy court judge on Tuesday authorized the nonprofit group, created by Congress in 1970, to mail claim forms to customers in the first week of January. Customers have six months to return the forms.

“They will return those claim forms to the trustee with data indicating what they believe they were owed, how much they put in, how much they withdrew,” said Stephen Harbeck, SIPC president and chief executive. “Since the records in this case are unreliable, the more information people can get us the faster we will be able to satisfy the claim.”

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