Fund Lawsuit in New York Against Madoff Auditor Dropped

March 26, 2012

The liquidators of a fund that once funneled money to the now-imprisoned swindler Bernard Madoff have dropped a $900 million lawsuit accusing Ernst & Young LLP of negligence, professional malpractice and breach of contract.

Ernst & Young had been challenged over its audits from 2003 to 2007 for M-Invest Ltd, a Cayman Islands-based “feeder fund” created by Union Bancaire Privee solely to invest client assets with Madoff’s firm, Bernard L. Madoff Investment Securities LLC.

The private Swiss bank and M-Invest had agreed in December 2010 to pay as much as $500 million to settle claims by Irving Picard, the trustee seeking money for Madoff’s victims, that they profited improperly from Madoff’s Ponzi scheme.

No reason was given for the discontinuance of the M-Invest lawsuit, which was disclosed in a one-sentence filing on Friday with the New York State Supreme Court in Manhattan. Ernst & Young has said the lawsuit was meritless.

Scott Berman, a lawyer for the liquidators, did not immediately return a call seeking comment.

Madoff, 73, is serving a 150-year prison sentence.

The case is M-Invest Ltd. v. Ernst & Young LLP, New York State Supreme Court, New York County, No. 653353/2011.

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