Fairfield to Pay Fine, Madoff’s Massachusetts Victims

Fairfield to Pay Fine, Madoff’s Massachusetts Victims

Sept. 8 (Bloomberg) -- Fairfield Greenwich Advisors LLC agreed to pay a $500,000 fine and return as much as $7.5 million to Massachusetts investors, the full amount they placed with Bernard Madoff through the New York firm.

The hedge-fund manager invested “almost all” of its $7.2 billion Sentry Fund with Madoff, Secretary of the Commonwealth William Galvin said today in a statement. Galvin, the state’s top securities regulator, rejected an offer from Fairfield in August to pay Massachusetts investors $6 million.

Fairfield Greenwich defrauded investors by misrepresenting what it knew about Madoff’s business, Galvin said in an April 1 complaint. Galvin said the firm tolerated Madoff’s evasions and failed to catch his massive fraud while making hundreds of millions of dollars in fees from investments with Bernard L. Madoff Investment Securities LLC.

The Fairfield settlement “represents the first investor relief ordered by a regulator in the Madoff scandal and I hope that it will become a template for other resolutions,” Galvin said today in a statement.

Galvin fined Madoff feeder fund Cohmad Securities Corp. $100,000 on May 8 and revoked the Massachusetts license of the New York firm. Cohmad was ordered to account for Massachusetts investors referred to Madoff and detail fees it earned from those referrals.

Madoff, 71, was sentenced in June to 150 years in prison for bilking investors out of $65 billion in the world’s biggest Ponzi scheme.

Fairfield’s settlement doesn’t include any admission of wrongdoing, the firm said today in a statement.

“This settlement with Massachusetts was deemed very important because it promised to be a lengthy and expensive hearing if we had to go through it,” Thomas Mulligan, a spokesman for Fairfield, said in an interview. “It made sense for Fairfield to try to settle this thing so we could focus on other pending litigation.”

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