BNY Mellon unit pays $210M to settle Madoff lawsuits
By Wire Reports
Published: Tuesday, Nov. 13, 2012, 11:24 a.m.
Officials reached a $210 million settlement with a Bank of New York Mellon Corp. subsidiary that advised clients to invest with Wall Street multibillion-dollar swindler Bernard Madoff.
The settlement of lawsuits filed by the New York attorney general, U.S. Labor Department and private plaintiffs against Ivy Asset Management also provides for about $9 million in payments by other defendants. Combined with anticipated future payments from Madoff bankruptcy proceedings, New York Attorney General Eric Schneiderman said it is expected to return nearly all of the original investments to those who were defrauded, including union pension funds from upstate New York.
“Ivy Asset Management violated its fundamental responsibility as an investment adviser by putting its own pecuniary interests ahead of the interests of its clients,” Schneiderman said. “Ivy deliberately concealed negative facts it uncovered in its due diligence of Madoff in order to keep earning millions of dollars in fees. As a result, its clients suffered massive and avoidable losses.”
Schneiderman cited an email from one Ivy principal sent to a subordinate: “Ah, Madoff, you omitted one possibility — he's a fraud!”
Ivy didn't disclose its suspicions to clients, Schneiderman said, and falsely told them that “we have no reason to believe there is anything improper in the Madoff operation.”
Labor Secretary Hilda Solis said the agreement “provides a measure of justice for those Americans who worked hard to prepare for their retirement and then saw hoped-for stability disappear.”
BNY Mellon referred questions to Ivy Asset Management, which has been winding down operations.
“Ivy is pleased to have reached an agreement that allows it to put these matters behind it,” said Douglas Squasoni, chief restructuring officer.
Between 1998 and 2008, authorities say Ivy was paid more than $40 million to give advice and conduct due diligence for clients with large Madoff investments.
Michelle Hook, spokeswoman for Schneiderman, said the losses included about $138 million by the 78 upstate New York pension funds, and most will be recovered. The settlement included fees and expenses for the government lawyers and plaintiffs.
Internal Ivy documents showed the firm had deep but undisclosed reservations about Madoff, authorities said. Its clients lost more than $236 million after Madoff's Ponzi scheme collapsed.
In 2010, then New York Attorney General Andrew Cuomo filed a civil complaint, alleging fraudulent conduct by Ivy in connection with securities sales and breach of fiduciary duty.
Ivy said then that its advisers raised questions about Madoff with clients and urged them to reduce their positions.
Authorities have said Madoff's Ponzi scheme cost investors an estimated $17.3 billion. He pleaded guilty in 2009 and is serving a 150-year prison sentence in Butner, N.C.
The Associated Press and the Los Angeles Times contributed to this report.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- That’s a Jeep Cherokee? No retro in 2014 model
- For Steelers defense, it’s all a matter of trust
- Jokinen takes center stage as fill-in for Pens’ Malkin
- Penguins notebook: Malkin to miss 2nd straight game Saturday
- Steelers notebook: Woodley expects to start Sunday vs. Dolphins
- Pitt slows down Loyola Marymount, 85-68
- Peduto puts on mayor hat at Harvard ‘camp’
- Long-overdue memorial to region’s World War II vets opens
- Fans of former conservative radio hosts Quinn, Tennent support toy drive
- Latrobe couple accused of using car trunk to end son’s fear of the dark
- Ex-Pirate Jones close to signing with Marlins