No Cash For Madoff Feeder Fund Investors, 2nd Circ. Rules

Law360, New York (February 22, 2013, 2:28 PM EST) -- Investors in so-called feeder funds that funneled money to Bernard Madoff's Ponzi scheme are not entitled to cash set aside for Madoff's victims, the Second Circuit said Friday.

Though their money went to Madoff's Bernard L. Madoff Investment Securities LLC in the end, feeder fund investors are not his “customers” under the law, a panel of judges said in a written decision.

“The record shows that they had no direct financial relationship with BLMIS,” the panel said.

The ruling, which affirms two lower court decisions, vastly...
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