On June 28, 2011, Law360 reporter Carolina Bolado filed an article entitled "Madoff Feeder Fund Investors Can't Sue Under SIPA" that named BakerHostetler Partner David J. Sheehan and Associates Seanna Brown and Bik Cheema, as well as SIPA Trustee and BakerHostetler Partner Irving H. Picard. The court decision described in the article ruled that feeder fund investors in Bernard L. Madoff Investment Securities (BLMIS) were not customers of the BLMIS under the Securities Investor Protection Act. Ms. Bolado summed up the court decision stating, "U.S. Bankruptcy Judge Burton R. Lifland said that because the investors bought ownership interests in the feeder funds and signed over their rights to make investment decisions to the managers of the funds, they did not have claims with Bernard L. Madoff Investment Securities LLC." The article referenced ongoing litigation regarding investors who bought shares in feeder funds invested in Bernard L. Madoff Investment Securities LLC, which is part of the case entitled Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC et al., case number 08-bk-01789, in the U.S. Bankruptcy Court for the Southern District of New York.
In the same article, Ms. Bolado also reported on the Bankruptcy Court approval of a $212 million settlement between Picard and two of the feeder funds, Greenwich Sentry LP and Greenwich Sentry Partners LP. On May 18, 2011, Reuters wrote a story on the announcement of the settlement which can be read here. Bolado writes of the court's approval of the settlement by stating, "In the deal, Picard will drop $212 million in claims in New York bankruptcy court — $206 million against Greenwich Sentry and $5.9 million against Greenwich Sentry Partners. The two funds agreed to judgments against them in those amounts, which will become general unsecured claims held by the trustee. In addition, the Greenwich funds, which had maintained that they lost a combined $334 million in the Madoff scheme, agreed to reduce their customer claims against the BLMIS estate to just $37 million, according to the settlement. The agreement mirrors Picard's May 9 settlement with the Greenwich funds' co-defendant Fairfield Sentry Ltd., Madoff's largest feeder fund, that slashed its claims by nearly $1 billion." BakerHostetler attorneys who worked on this matter include: Partners Irving H. Picard, David J. Sheehan, Mark Kornfeld, Patrick Hannon, Tom Long, Sherri Lazear and Associates Jessie Gabriel, Lindsay D’Andrea, Lauren Hilsheimer, Melissa Kosack, Kelvin Lawrence, and Catherine Woltering.
Read the article.