It’s been a rough couple of months at the U.S. Court of Appeals for the Second Circuit for investors in feeder funds that lost money in Bernard Madoff’s Ponzi mega-fraud.
On July 10, two sets of investors in funds managed by Tremont Group Holdings Inc., which lost more than $3 billion in client money in Madoff’s scheme, lost out in their bid to revive claims against the funds’ auditors at KPMG and Ernst & Young. A three-judge Second Circuit panel issued a 12-page summary order upholding dismissal of the plaintiffs’ federal securities claims against the auditors. The Second Circuit agreed with rulings by Southern District Judge Thomas Griesa in Manhattan that the allegations that the accounting firms ran inadequate audits of the Tremont funds didn’t support a strong inference of scienter.
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