Multi-million Dollar Payout in Madoff Breach of Fiduciary Duty Suit
Posted on Jan 01, 2016
In a recent settlement, a unit of the Bank of New York Mellon Corp. agreed to pay $210 million relating to claims that it breached its fiduciary duty when concealing doubts about the business operated by convicted felon Bernard L. Madoff. The unit is Ivy Asset Management LLC. The lawsuits were brought by the New York attorney general’s office, the U.S. Department of Labor, and various investors. In addition to the $210 million in damages, more than $9 million will be contributed by other defendants in the cases.
Ivy Asset Management LLC, like many other financial firms, had directed money to Bernie Madoff’s firm. The lawsuits brought against it attempt to hold the LLC liable in light of the fact that it profited from the returns that were generated by Madoff’s firm while he was running his Ponzi scheme. It allegedly received more than $40 million between 1998 and 2008 in exchange for advising clients and conducting due diligence for clients who invested with Madoff. These investors suffered more than $236 million in losses. The LLC is closing down its operations.
According to the lawsuit, the LLC’s due diligence revealed that Madoff was not investing the funds as he claimed to be. However, the LLC failed to disclose these findings to its clients and instead misled them about Madoff’s firm. By doing so, the LLC was able to continue collecting fees. New York Attorney General Eric Schneiderman stated that an investment adviser has a fiduciary duty to advise its clients of risks. The LLC’s failure to report this information directly caused the substantial financial losses suffered by its investors.
To learn more about this and other breach of fiduciary duty matters, contact a New York business litigation lawyer today at (888) 497-3410.