In the first regulatory action against one of the big so-called ??feeder? funds that channelled money to Bernard Madoff, the top securities authority in Massachusetts on Wednesday accused Fairfield Greenwich of deliberately turning a blind eye to the former broker??s Ponzi scheme.
In a civil complaint, William Galvin, the Massachusetts regulator, claimed that there was a ??profound disparity???? between the due diligence Fairfield told investors it was conducting in relation to investments with Mr Madoff and what it actually did.
Mr Galvin said in failing to do meaningful due diligence, Fairfield ??turned a blind eye and profited from doing so????. The complaint also claimed that Mr Madoff gave top Fairfield officials instructions on how to respond to questions from attorneys at the Securities and Exchange Commission which was looking into his business in in 2005. According to a transcript of a recorded telephone conversation, Mr Madoff told Fairfield??s general counsel: ??Obviously, first of all, this conversation never took place . . . okay??
Fairfield, which lost more than $7bn to Mr Madoff, called the allegations ??false and misleading???? and said it would ??vigorously contest???? them.
It said: ??Contrary to the allegations, Fairfield Greenwich Group conducted vigorous and robust monitoring on an ongoing basis of the Madoff investments.????
Separately, US marshals in Florida seized two boats ?? including a 55ft yacht owned in the name of Mr Madoff??s wife, Ruth ?? and the Madoffs?? Palm Beach estate. They are among the assets US federal prosecutors have said they intended to confiscate as part of efforts to recover money for investors.
