Fairfield Greenwich to pay $8M to clients burned by Madoff scam

Fairfield Greenwich Advisors LLC and Fairfield Greenwich Ltd. were slapped with a $500,000 fine today and ordered to pay restitution of $8 million to Massachusetts investors who placed their money into a hedge fund that was invested with convicted swindler Bernard L. Madoff.

Without admitting or denying the state’s allegations, the firms, which are part of the Fairfield Greenwich Group, consented to the order to pay a civil penalty of $500,000 and provide restitution to all investors.

The exact number of investors involved has not yet been determined.

“This Fairfield settlement, which provides restitution for Massachusetts investors, represents the first investor relief ordered by a regulator in the Madoff scandal and I hope that it will become a template for other resolutions,” William Galvin, secretary of the Commonwealth of Massachusetts, said in a statement.

Greenwich had been charged with “failing to do rigorous due diligence of Bernard Madoff coupled with misrepresenting to Massachusetts investors its lack of knowledge of how Bernard L. Madoff Investment Securities operated,” the statement said.

The firm placed almost all of its $7.2 billion of Sentry Fund assets with Mr. Madoff’s firm.

The settlement does not include any admission of wrongdoing, Fairfield Greenwich noted in a statement issued today.

“[It] also dropped fraud charges that were included in the original complaint filed by Massachusetts on April 1, 2009,” the statement said.

“In agreeing to the settlement, Fairfield Greenwich’s goal was to resolve the Massachusetts action in order to avoid drawn-out hearings and significant legal bills, so that the firm could focus its time and resources on other legal claims involving many more investors.”

Related Topics: Fines/Censures