The negotiation included the liquidators of the Fairfield Sentry feeder funds, who signed off on the deal.
FORBES: Madoff Trustee Gets Up To $500 million from Union Bancaire Privee
Further, I think a copy should be sent to all of those feeder funds in the Madoff case.
They invested in third-party feeder funds, and therefore don't qualify for the financial protections extended to direct investors.
Madoff allegedly conducted his Ponzi scheme for more than three decades, relying on so-called feeder funds like Cohmad to recruit investors.
Some professional investors put money with feeder funds linked to Bernie Madoff, for example, even though statistical analysis suggested his performance record was implausibly smooth.
In a press release, Picard claims UBS actively assisted the Madoff Ponzi scheme by sponsoring and administrating Luxalpha SICAV and Groupement Financier, two feeder funds.
The majority of the claims -- 13, 054, or nearly 80% of the total -- have been denied, because the investors were invested through feeder funds.
Some providers offer a single, one-size-fits-all or model portfolio, while others offer some customization at the asset allocation level, implemented through a series of proprietary funds-of-funds or feeder funds.
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Picard also recently filed a complaint against UBS accusing the Swiss bank of fraud and misconduct in connection with feeder funds that funneled investor cash into the Ponzi scheme.
FORBES: Madoff Trustee Gets Up To $500 million from Union Bancaire Privee
Siedle believes that the feeder funds investing with Madoff "were all aware that Bernard L. Madoff was engaging in illegal conduct ... and intentionally chose to participate in and support Madoff's illegal conduct to reap enormous illicit financial benefits, " according to the affidavit.
There aren't any statistics that track the practice, but Michael Oates, a CPA with Rothstein Kass in New York who advises alternative investment funds, says many hedge funds are allowing U.S. individual investors to come in through foreign feeder funds or are considering it.
The co-liquidator of the biggest feeder fund for Bernard L. Madoff Investment Securities says some investors in the Fairfield Sentry funds had knowledge of the massive financial fraud and profited as a result.
FORBES: EXCLUSIVE: Some Fairfield Investors Knew About Madoff Ponzi and Profited
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