PwC in $55 million settlement with Madoff feeder fund investors

[January 07, 2016]  By Jonathan Stempel

NEW YORK (Reuters) - PricewaterhouseCoopers agreed to pay $55 million to settle claims it failed to audit properly the books of Fairfield Greenwich Group, the biggest operator of "feeder funds" for now-imprisoned swindler Bernard Madoff, court papers showed.

The all-cash settlement with Fairfield Greenwich investors was disclosed Wednesday night in filings with Manhattan federal court. PwC denied wrongdoing, the filings showed.

Representatives of PwC did not immediately respond to requests for comment.

According to court papers, Fairfield Greenwich investors suffered big losses on the more than $7 billion of their money that was sent to Bernard L. Madoff Investment Securities LLC, the epicenter of Madoff's Ponzi scheme.

The investors accused PwC of failing to exercise reasonable care and acting negligently in auditing the financial statements of the Fairfield Sentry, Fairfield Sigma, Fairfield Lambda and Greenwich Sentry funds from 2002 to 2007.

Prior settlements on the investors' behalf included a $125 million accord with hedge fund administrator Citco Group, and an $80.3 million accord with Fairfield Greenwich itself.

The PwC settlement requires approval by U.S. District Judge Victor Marrero in Manhattan.

Fairfield Greenwich investors are represented by the law firms Boies, Schiller & Flexner; Wolf Popper; and Lovell Stewart Halebian Jacobson.

They plan to seek legal fees of up to $16.5 million, or 30 percent of the settlement fund, plus up to $2.5 million for expenses, court papers showed.

Madoff, 77, is serving a 150-year prison term. He pleaded guilty to fraud in March 2009, three months after his scheme was uncovered and he was arrested. The Fairfield Greenwich litigation began one week after his arrest.

The case is Anwar et al v. Fairfield Greenwich Ltd et al, U.S. District Court, Southern District of New York, No. 09-00118.

(Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman)

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