Simpson Thacher on Newest Fairfield-Greenwich Suit
Simpson Thacher on Newest Fairfield-Greenwich Suit
Posted by Zach Lowe
It's been a tough few days for Fairfield-Greenwich Group. Earlier this week, a state judge in Connecticut froze its assets--and those of its chief partner, Walter Noel, Jr.--as part of a lawsuit brought against the big-time Madoff feeder by a suburban town's pension fund. And today, the Massachusetts secretary of state filed charges against the hedge fund, claiming its investment advisory group breached its fiduciary duty to customers by failing to perform adequate due diligence on Bernard Madoff's investment operation, according to Reuters.
Simpson Thacher & Bartlett has been representing Fairfield-Greenwich on dozens of civil lawsuits brought by investors since the Madoff scandal broke, and partner Mark Cunha says the firm is "99.99 percent" likely to represent the feeder fund in the Massachusetts case. (The Mass. charges are civil, not criminal). The complaint from Secretary of State William Galvin, sites the "profound disparity between the due diligence Fairfield-Greenwich represented to investors" and the diligence it actually performed. In marketing materials, the firm boasted that it had $14 billion of assets under management, almost half of which it poured into Madoff's firm.
In depositions, Fairfield-Greenwich executives testified that the fund earned more than $100 million annually in investor fees linked to money invested with Madoff; Simpson Thacher lawyers accompanied some of those executives during their testimony before Galvin's investigators, Cunha says.
Curiously, the complaint does not name Noel or any other individual Fairfield-Greenwich exec. Glenn Kurtz of White & Case is representing Noel in any Madoff-related matter in which Noel is named, he says. That includes the Connecticut case, Kurtz says. In that case, a state trial court judge has scheduled a hearing for April 13 to discuss the asset freeze currently in place, according to Bloomberg.
