Securities: Bank Sued by Madoff Investors

Individuals defrauded by Bernie Madoff have brought a class action suit in Miami federal court against a bank for bilking customers out of fees charged to manage investments in a Madoff fund. The suit alleges that the bank, Standard Chartered, headquartered in London charged fees to invest in a Madoff feeder fund, Fairfield Sentry.

The plaintiffs claim that the bank failed to adequately manage the investments. As a result, it failed to realize that Madoff's valuations of his funds' assets were fraudulent. The suit alleges that Standard Charter invested about $300 million in Fairfield Sentry and received more than $5 million in management fees.

This is one of several suits against third party "deep pockets" that plaintiffs have brought throughout the country. Since Madoff and his funds appear to have dissipated virtually all of the monies invested, the defrauded investors have turned to third parties, such as Standard Chartered, who operated investment vehicles, which put the investors' monies into the Madoff funds. The third party suits typically allege breaches of contract, fiduciary duty, and fraud.

Please see The Miami Herald, "Investors: Return Madoff Fees," June 16, 2009, page C1, for an article about the Miami suit.