U.S. District Judge Jed Rakoff refused on Monday to let the liquidating trustee for Bernard L. Madoff’s defunct firm seek appellate review of a decision weakening clawback suits against investors affected by the Ponzi scheme, saying the cases should not “languish” while the Second Circuit tackles a narrow question of law. Ruling against both Bernard L. Madoff Investment Securities LLC trustee Irving Picard and the Securities Investor Protection Corp., Judge Rakoff declined to allow an appeal of a May decision that put the onus on Picard to plead adequately that investors affected by the notorious $65 billion fraud showed a lack of good faith. Picard had asked for an interlocutory appeal on the grounds that the suits could be sent back to “square one” if the appeals court later reversed Judge Rakoff’s holding that the defendants could challenge the assumption that they were sophisticated market participants who, while not necessarily aware of the scheme, breached their duty to investigate suspicious Ponzi scheme returns. More on Law360 [...]

If you have a problem with your investment broker and you cannot resolve the dispute on your own, you probably won’t get your day in court. But you will be heard, most likely in a conference room somewhere, before a panel of arbitrators. The moment people open a brokerage or investment account, they most likely — and perhaps inadvertently — waive their right to sue. The fine print of most customer agreements almost always contains a clause that says the customer agree to resolve any future disputes through arbitration, largely through the forum operated by the Financial Industry Regulatory Authority, Wall Street’s self-regulatory organization, known as Finra. The mandatory nature of these agreements — which are increasingly appearing in other consumer financial products as well and have been repeatedly blessed by the Supreme Court — is a frequent complaint of consumer advocates. And if you try to avoid brokers’ so-called predispute arbitration clause, you may have little choice but to stow your savings in a mattress. More in the New York Times [...]

Five former employees of disgraced investment manager Bernard Madoff should be sentenced to “significant” prison sentences of up to 20 years or more, prosecutors said in a court filing on Friday. “The five defendants here, along with others, were the people who allowed Madoff’s fraud to succeed as wildly as it did,” prosecutors with U.S. Attorney Preet Bharara’s office in Manhattan said in the filing. “Justice requires that each receive a significant prison sentence, commensurate with their active and long-standing role in the fraud.” A jury in March convicted Madoff’s former office director Daniel Bonventre, portfolio managers Annette Bongiorno and Joann Crupi, and computer programmers Jerome O’Hara and George Perez for helping their former boss conceal his multibillion-dollar Ponzi scheme for decades. More on Reuters [...]

Ponzi schemer Bernard Madoff’s trustee Wednesday reinforced his bid to appeal a New York federal judge’s decision that could threaten his clawback suits against investors affected by the massive scheme, saying that without the Second Circuit’s input, the bankruptcy court could reach bogus conclusions in dozens of related cases. Irving Picard argued in court filings that U.S. District Judge Jed S. Rakoff’s May decision to allow defendants to seek dismissal of his claims because he had failed to adequately show they were motivated by a lack of good faith was completely out of step with other courts. Judge Rakoff was the first in more than 40 years to hold investors suing under the Securities Investor Protection Act to heightened standards of proof when attempting to claw back avoidable transfers, Picard said. “The questions of law resolved by [Judge Rakoff's] order are novel,” Picard argued in his Wednesday reply. “Without an appeal now, the Bankruptcy Court may apply possibly erroneous conclusions of law in scores of cases with varying facts, all of which will result in multiple appeals anyhow. … The Order involves threshold legal determinations that are common across the adversary proceedings, warranting immediate review on appeal.” More on Law360 [...]

Tremont Group Holdings Inc. and Ernst & Young LLP must face an investor lawsuit over losses tied to Bernard Madoff’s fraud after the Washington state Supreme Court upheld an appeals ruling reviving the case. FutureSelect Portfolio Management Inc., which lost $195 million in Tremont’s feeder fund when Madoff’s Ponzi scheme collapsed, is entitled to try to prove its allegations, the state’s highest court ruled today. Tremont was the second-biggest feeder into Madoff’s multibillion-dollar fraud, after Fairfield Greenwich Group. FutureSelect, based in Kirkland, Washington, sued in state court in Seattle accusing Tremont of failing to detect the fraud and notify the company of risks associated with Madoff’s funds. FutureSelect invested in the funds, managed by Madoff from 1998 to 2007. More on Bloomberg [...]

Bernard Madoff’s sons, Mark and Andrew, always claimed they knew nothing about their father’s epic Ponzi scheme—after all, they turned their father in after he confessed in December 2008. But a new lawsuit by the court-appointed trustee rounding up funds for investors alleges the sons knew far more than they have ever admitted. Only Andrew, 46, survives. His older brother Mark committed suicide in 2012. The complaint by trustee Irving Picard is the latest version of a $150 million lawsuit alleging the brothers knew full well what their father was up to. More on CNBC [...]