In an opinion yesterday, Judge Batts dismissed claims by investors in a Madoff feeder fund against the fund’s managers and auditors because, under the law of the British Virgin Islands (where the funds were organized), only the fund had standing to assert the claims. If fact, she noted, similar claims against the same defendants are being pursued by the fund itself in BVI liquidation proceedings:

"BVI/Bermuda law generally bars claims by shareholders even when they assert personal losses where that loss is reflective of the loss of the company . . . .

In essence, . . . Plaintiffs seek damages for the net loss of their principal (presumably, their initial investment minus the end value of their shares) and return of fees paid to the Defendants. These are precisely the types of claims that the Funds have asserted against [the defendants] in the BVI proceedings.

Plaintiffs argue that these proceedings will not . . . compensate them fully because it is likely that distributions would be made on a pro rata basis to all shareholders owning shares in December 2008, based on BVI/Bermuda law. . . .

The Court rejects the arguments that because there may be a more beneficial methodology for calculating loss in the Second Circuit or the Plaintiffs may not recover as much through the BVI liquidation proceedings, the reflective loss principle does not apply. "

Even though the standing issue was dispositive, Judge Batts’ 145-page opinion addresses several other of the defendants’ grounds to dismiss (including the application of SLUSA), agreeing with some and disagreeing with others.