Bloomberg News

BDO Seidman Asks Dismissal From Merkin-Related Suit

June 26, 2009

BDO Seidman LLP asked to be dropped from a lawsuit seeking to hold it responsible for Bernard Madoff-related losses suffered by investors in funds run by New York financier Ezra Merkin.

BDO Seidman filed the request today in federal court in New York, saying the complaint against the auditing firm is legally insufficient. The suit seeks class action, or group, status on behalf of other investors in Merkin’s funds. New York Law School, which had $3 million invested in Ascot, founded by Merkin, filed the lawsuit in December.

“The amended complaint contains a hodgepodge of assertions against BDO,” the New York-based auditor said in its dismissal request.

Merkin, chairman of auto lender GMAC LLC, told the school Dec. 11 that virtually all of Ascot’s $1.8 billion of assets had been lost after investing with Madoff, according to the lawsuit. In financial statements, Ascot had claimed it invested in a “diverse portfolio of securities” that engaged in “index arbitrage” through third-party managers, the law school said.

Merkin “had abandoned diversity by giving a single third- party manager, Madoff, management responsibility and discretion over Ascot funds,” New York Law School said in the complaint.

BDO argues that there’s nothing in the complaint to support a claim that the auditor “had any role” in the funds’ investment decisions.

The case is In Re Merkin and BDO Seidman Securities Litigation, 08-cv-10922, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: David Glovin in U.S. District Court in New York at 9245 or dglovin@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.


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