Tremont Securities Law, State Law, and Insurance Litigation
On August 8, 2011, the Honorable Thomas P. Griesa of the United States District Court for the Southern District of New York granted final approval for a proposed settlement exceeding $100 million.
Bernstein Liebhard LLP is the court-appointed lead counsel in In re Tremont Securities Law, State Law, and Insurance Litigation, No. 08-CV-11117 (TPG) (S.D.N.Y). As lead counsel, the firm represents limited partners who invested in the Rye Select and Tremont investment funds, which were “feeder funds” into the now-infamous multi-billion dollar Ponzi scheme orchestrated by Bernard L. Madoff (“Madoff”).
Pursuant to the settlement the Settling Defendants and Plaintiffs in the Securities Action, the State Law Action and the Insurance Action, agreed to a settlement consisting of $100 million in cash, plus interest (“Gross Settlement Fund”). Additional monies are expected to be added to the Gross Settlement Fund from the cash and cash equivalents remaining in Tremont Group Holdings, Inc. after the wind down of its and its subsidiaries’ operations and pursuant to the Tremont Defendants’ assignment of the certain of the funds’ legal claims against certain third parties and a 50% interest in litigation currently being pursued by certain of the Tremont Defendants against third-party insurers. The settlement also provides for payment from the cash and cash equivalents remaining in the funds to current limited partners and/or shareholders in the funds, regardless of whether claimants are members of a subclass or opt out of the settlement.
The settlement is the product of a two day of mediation, conducted under the supervision of an independent mediator, (retired) United States District Court Judge, Layne Phillips. Jeffrey M. Haber, the partner heading the litigation for Bernstein Liebhard LLP, is pleased with the settlement stating, “this is a fantastic recovery for the class, the settlement provides investors in the Tremont funds – many of whom did not know their money was invested with Madoff – with a means of recovering some of their losses attributable to the fraud.” The consolidated amended complaint in the Securities Action alleges that the Settling Defendants violated the federal securities laws by issuing false and misleading statements in the funds’ offering documents and other materials. These false and misleading statements misrepresented to investors that Tremont Defendants would and did conduct proper due diligence prior to, and after, investing the funds’ assets with outside investment managers such as Madoff, when in fact no such due diligence took place.
Plaintiffs also allege that the funds’ outside auditors, KPMG LLP (“KPMG”) and Ernst & Young LLP (“E&Y”), issued false and misleading audit opinions concerning the Rye and Tremont funds’ financial statements by issuing clean audit opinions that misrepresented that the funds were generating returns that did not, in fact, exist. Plaintiffs’ claims against the auditor defendants are not part of the settlement and are pending.
For more information about the settlement and a copy of the Stipulation of Settlement, please visit www.tremontlitigationsettlements.com.
