Tremont Group Holdings, the hedge fund manager that created a leveraged fund that invested heavily with Madoff without ever revealing that this was their “strategy,” has been sued again. And, for good measure, the investors are suing E&Y too.
Tremont, based in New York, “recklessly” permitted about 27 per cent of its investment capital to be placed with Madoff, while Ernst & Young failed to notice “red flags indicating high risk” to the hedge-fund firm, according to the complaint, which seeks unspecified money damages.
Group Defined Pension Plan & Trust, a pension plan operator for Jersey City-based Tops Personnel Inc., lost $400,000, according to Longer, a lawyer with the firm Levin, Fishbein, Sedran & Berman in Philadelphia. Hundreds of other investors are capable of joining the lawsuit, he said.
Tremont had $3.3 billion, or more than half its total assets, invested with Madoff, a person familiar with the matter said this month. Of that, the firm’s Rye Investment Management unit had $3.1 billion, virtually all the money it managed, allocated to Madoff, said the person, who declined to be identified because the information is private.
Tremont had another $200 million, or about 7 per cent of its total assets, invested through its fund of funds group, Tremont Capital Management.
The case is Group Defined Pension Plan & Trust vs Tremont Market Neutral Fund LP, et al, 08-cv-11359, U.S. District Court, Southern District of New York (Manhattan).
A few weeks back DealBreaker published an awesome collection of Tremont documents. Go ahead and see if you can find where they disclose that their real strategy was giving money to Madoff, closing their eyes, crossing their fingers and hoping!