Tremont Group Holdings Inc. of New York is closing its hedge fund division following $3.1 billion in losses associated with the Bernie Madoff scandal, according to the firm.

Tremont Group Holdings Inc. of New York is closing its hedge fund division following $3.1 billion in losses associated with the Bernie Madoff scandal, according to the firm.

Rye (N.Y.) Investment Management, Tremont’s hedge fund unit, had invested all of its assets in a fund tied to Bernard Madoff Investment Services.

Tremont will retain staff from the Rye division to seek recovery of available assets from a $50 billion Ponzi scheme allegedly perpetrated by Mr. Madoff and his New York-based investment firm.

In December, Tremont reported that its fund of hedge funds division, Tremont Capital Management, lost $200 million related to the Madoff scandal. That division reportedly had nearly $3 billion under management at the end of 2008, and the company reported that the division would remain open.

"Tremont has restructured its business to reflect market conditions and the reduced amount of assets under management. While the Rye Investment Management unit is permanently suspended, it also retains the staff necessary to seek to recover any available Madoff assets,” Tremont spokesman Montieth Illingworth said in a statement.