Madoff Case Trustee Picard Subpoenas Jefferies Unit

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Madoff Case Trustee Picard Subpoenas Jefferies Unit


By Christopher Scinta

Feb. 16 (Bloomberg) -- A unit of Jefferies Group Inc., the New York brokerage that specializes in mid-sized companies, received a subpoena from Irving Picard, the trustee seeking to liquidate Bernard L. Madoff Investment Securities LLC and pay investors in the alleged Ponzi scheme.

The subpoena was served in New York on Jefferies & Co., according to a Feb. 13 U.S. Bankruptcy Court filing that didn’t disclose what information Picard is seeking. It’s the first shown in court records as being issued in the case. Other investigations are being conducted by the Federal Bureau of Investigation and the U.S. Securities and Exchange Commission.

Picard in January received authority from Judge Burton Lifland in New York to issue subpoenas as part of a broad investigation of the Madoff firm’s assets and conduct.

Thomas Tarrant, a Jefferies spokesman, and Kevin McCue, a spokesman for Picard’s law firm, Baker Hostetler LLP in New York, didn’t respond to requests for comment outside business hours today on the President’s Day holiday.

Anyone subpoenaed has 10 days to provide documents Picard requests or argue they are privileged information, and 15 days to produce any witnesses for examination, according to a court order. Picard, appointed by the Securities Investor Protection Corp., said earlier he needs prompt access to information and subpoenas provide the only way to get it.

Trustee’s Mission

The trustee is working to collect as many assets as possible to pay back creditors of the Madoff’s trading firm. He said earlier this month he has recovered about $946.4 million in cash and securities for customers of the bankrupt firm allegedly at the center of a $50 billion Ponzi scheme.

Bernard Madoff was arrested by FBI agents in December and charged with securities fraud. Madoff, 70, hasn’t formally responded to the criminal charge, though on Feb. 9 he partially settled a parallel suit by the SEC. He said he wouldn’t challenge the SEC allegations when the judge in that case determines the penalty. Madoff didn’t admit or deny any wrongdoing in the settlement.

On Feb. 5, Picard filed with the court a 162-page list of Madoff customers for the year before his Dec. 11 arrest. Jefferies isn’t among them.

Madoff creditors may file claims until July 2. Customers should submit forms before March 4 to be paid “out of customer property,” according to Picard’s Web site. Some investors who took money out of Madoff accounts before the firm failed have challenged the date.

The Bankruptcy Court case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Christopher Scinta in New York bankruptcy court at cscinta@bloomberg.net.

Last Updated: February 16, 2009 15:56 EST