A $210 million settlement has been reached in a civil lawsuit filed in 2010 by then New York Attorney General, Andrew Cuomo, against a Bank of New York Mellon subsidiary, Ivy Asset Management. The litigation arose out of losses sustained by investors that were fraudulently advised to invest in the Madoff Ponzi scheme. According to Eric Schneiderman, New York Attorney General, “Ivy deliberately concealed negative facts it uncovered in its due diligence of Madoff in order to keep earning millions of dollars in fees.” Ivy was paid over $40 million to perform due diligence and give advice to its clients regarding their Madoff investments. Despite discovering information that Madoff was not investing funds as represented, Ivy allegedly failed to disclose this information to its clients for fear of losing the fees it received from the investments in the Madoff funds.
As a result of Ivy’s allegedly fraudulent conduct, its clients lost over $236 million when Madoff’s Ponzi scheme collapsed. Ivy’s clients were made up of dozens of New York union pension plans, as well as hundreds of individual investors. In addition to the $210 million to be contributed by Ivy, another approximately $9 million will be funded by other defendants to the litigation.
When combined with the money expected to be paid from the liquidation of Madoff’s estate by trustee, Irving Picard, this settlement is expected to compensate the defrauded Ivy Asset Management investors of nearly all of the money lost in the investment scheme. (“A.G. Schneiderman Obtains $210 Million Settlement With IVY Asset Management In Connection With Madoff Ponzi Scheme,” AG.NY.gov, Press Release, November 13, 2012).