A federal judge suggested that investors in Bernard Madoff feeder funds may be entitled to no payouts as he considers a dispute between the bankruptcy trustee for the Madoff estate and the New York State attorney general. The trustee, Irving Picard, has moved to block New York’s $410 million settlement with J. Ezra Merkin, who ran three Madoff feeder funds. Picard himself is seeking $500 million from Merkin and complains that the New York deal is an “end run” around bankruptcy law. New York Attorney General Eric Schneiderman says that Picard has no claim to the settlement money and no power to stop him. And his lawyer told U.S. District Judge Jed Rakoff that, if Picard is successful, Merkin’s investors, who lost more than $1.2 billion, will be left with nothing. More in FinAlternatives here.
