Bloomberg News

Bank of New York Mellon Sued for Negligence Over Madoff

December 12, 2011

(Updates with complaint’s excerpts in second paragraph.)

Dec. 12 (Bloomberg) -- Bank of New York Mellon Corp. was sued on behalf of three funds for negligence in connection with the Ponzi scheme run by convicted fraudster Bernard L. Madoff.

Bank of New York Mellon and its BNY Alternative Investment Services unit, which served as administrator, sub-administrator and custodian of the Rye funds, acted with “gross negligence” and helped funnel billions of dollars into Madoff’s scheme, according to the complaint, which was filed in New York State Supreme Court on Dec. 9.

Bank of New York Mellon and BNY “turned a blind eye to Madoff’s scam and reaped tens of millions of dollars in fees from the Rye funds, whose assets were entrusted to the BNY defendants and ultimately plundered by Madoff,” according to the complaint, which seeks unspecified compensatory and punitive damages. Tremont Partners Inc. served as the general partner and investment manager for the funds.

Kevin Heine, a spokesman for Bank of New York Mellon in New York, declined to immediately comment on the lawsuit.

The case is Plaintiffs’ State and Securities Law Settlement Class Counsel on Behalf of the State Law Subclass and the Securities Subclass in “In re: Tremont Securities Law, State Law and Insurance Litigation” v. Bank of New York Mellon Corp., 653415/2011, New York State Supreme Court (Manhattan).

--Editors: Mary Romano, Stephen Farr

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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