Breaking news from December 2008

Greenwich Bank & Trust’s parent has been sued in a class action brought by disgruntled Madoff investors. The first suits were filed last year within days of Madoff’s confession but now David Golub has stepped in with a new bunch of litigants. He’s an excellent lawyer, although I don’t remember him being involved in this field back when I was hunting wicked stockbrokers. Will he succeed? Who knows – his theory seems to be (and I’m basing this on a few scant newspaper paragraphs, not from a reading of the actual complaint) is that some “Investment Adviser”, a Ron Silverman, pooled clients’ assets, invested them with Madoff, and used GN&T’s parent as a custodian. Silverman went belly up as quickly as Walter Noel did so Golub is after the bank, claiming that if they had taken physical possession of the securities Madoff claimed to be purchasing, they’d have discovered the fraud.

Well, maybe, but Madoff was supposed to be going in and out of the market numerous times a day so what’s a custodian supposed to do to take possession? At first blush, I’d say this was a loser, but Golub’s a far better lawyer that I ever was, so I’ll make no prediction.

3 Comments

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3 responses to “Breaking news from December 2008

  1. Cookslaw

    Actually you are wrong . Madoff was not day trading as you imply. Madoff, according to various reports, went into the market 7 times in 2007. His purported trading was a timing strategy and the rest of the time the money was in or supposed to be in T-bills. The rest of the time the assets should have been with the custodian. In fact I think he probably has a case that is as close to summary jugment as you can get based on the custody agreement.

  2. Hu Nhu

    It should be fun to watch but I don’t think it’s a slam dunk by any means. The feeders’s duties, among other things, can’t be overlooked.