Connecticut AG Sues Custodian for Madoff Feeder Funds
The Connecticut Attorney General has filed a suit against the bank that served as the custodian for two feeder funds that invested with Madoff. The AG charges the bank with “effectively aiding and abetting Madoff’s massive fraud, ignoring clear and compelling signals that his investments were bogus.” The press release states that the bank was responsible for billing, taking legal possession of securities, and verifying purchases/sales.
OUR TAKE: Various Madoff-related suits and enforcement actions have expanded the possible defendants supposedly responsible for the fraud. Whether a mere custodian for a feeder fund will ultimately have liability remains to be seen.