Massachusetts regulators charge Fairfield Greenwich Group with fraud. This is a civil complaint by the Securities Division and not the sort of thing that will directly cause certain principals to join Bernie in Ossining, but the hell just continues, and where civil authorities smell fraud, can criminal charges be far behind? I’d ask where our own stalwart Greenwich AG Blumenthal is but, as always, he’s lurking on the sidelines, ready to dash out and snatch the baton once his work is done for him. Besides, he’s a friend and neighbor of Walt’s and probably doesn’t want to return his campaign contributions.
April 1 (Bloomberg) — Massachusetts Secretary of the Commonwealth William F. Galvin accused Fairfield Greenwich Group of fraud in misrepresenting to Massachusetts investors its lack of knowledge of the operation of Bernard L. Madoff Investment Securities.
The administrative complaint filed by Galvin in Boston seeks restitution to Massachusetts investors for losses and reimbursement for performance fees paid to Fairfield by those investors. It also seeks an administrative fine.
“Investment advisers have a fiduciary responsibility to their clients under law,” Galvin said in the statement. “The allegations against Fairfield in this complaint outline a total disregard for such responsibility, which helped the Madoff scheme stay afloat for so long.”
Fairfield founder Walter Noel admitted in testimony to the securities division that Fairfield was not involved in anything “but turning money over to” Madoff, according to Galvin’s statement.
Galvin said Madoff coached Fairfield executives on how to respond to questions from the U.S. Securities and Exchange Commission who were looking into concerns of fraud by Harry Markopolos, a former money manager, who has told Congress he tried to persuade the agency for nine years that Madoff was a fraud.
Fairfield executives “were blinded by the fees they were earning, did not engage in meaningful due diligence and turned a blind eye to any fact that would have burst their lucrative bubble,” according to Galvin’s complaint.
Earlier this week a Connecticut judge froze the assets of Fairfield Greenwich Group and other so-called feeder funds that steered investors to Madoff, along with those of Madoff’s family members, a lawyer said.