The United States Department of Labor (DOL) filed a lawsuit against several New York investment management firms and their principals who provided advice to pension plans that invested with Bernie Madoff (Solis v. Beacon Associates LLC, S.D.N.Y., No. 10-CV-8000, 10/21/10).
The lawsuit alleges a breach of fiduciary duties under ERISA when they recommended investments with Mr. Madoff in the midst of several red flags that should have caused them to question Mr. Madoff. The breach of fiduciary duties, according to DOL's lawsuit, caused dozens of ERISA plans to lose hundreds of millions of dollars.
DOL's lawsuit follows numerous lawsuits that have been filed against some of these same defendants. In October 2010, a court provided an initial favorable ruling involving one of these lawsuits, leaving intact most of the ERISA breach of fiduciary duty claims.
DOL's lawsuit asks the court to require the defendants to pay for all plan losses and to return any fees and profits. Finally, the SEC has asked the court to permanently bar the defendants from serving as fiduciaries for ERISA plans.