Money managers under the microscope
In Charles Dickens’ novel, Bleak House, a long-running dispute over a legacy only ends when the estate’s assets have been completely devoured to pay the army of lawyers involved in the litigation. Delighted, the lawyers move on to the next case, while one heir of the estate ends up a nervous wreck, his assets all gone.
Madoff investors may feel they are in a similar predicament, watching on helplessly as the scant assets so far recovered dwindle while liquidators and trustees wrangle over how to apportion them.
A recent dispute between Madoff trustee Irvin Picard and the liquidators of the Kingate feeder funds, which lost an estimated $3.5 billion in Madoff’s fraud, involved the trustee, the liquidators Zolfo Cooper and a phalanx of other legal advisors including the liquidator’s British Virgin Islands advisers Whithers BVI; and their US advisers Quinn Emanuel Urquhart Oliver & Hedges.
The liquidator advised investors to vote to settle the dispute with the trustee, reasoning that money tied up in legal action against the trustee could not be used in the attempt to recover investor funds or, via requests for restraining orders and the like, to prevent assets discovered from being spirited away.