Ernst & Young LLP was accused of negligence, malpractice and breach of contract in a lawsuit filed by the liquidators of M-Invest Ltd., a so-called feeder fund for Bernard Madoff’s bankrupt investment firm.
The suit seeks $900 million in damages from the New York- based accounting firm over audits of M-Invest’s annual financial statements from 2003 to 2007, according to papers filed yesterday in New York State Supreme Court in Manhattan. The two- page filing by the fund, now in voluntary liquidation, provides no details of the allegations against Ernst & Young.
Union Bancaire Privee, a private Swiss bank that set up M- Invest, a Cayman Islands corporation, to invest money with Madoff, agreed to pay as much as $500 million in December 2010 to settle claims by Irving Picard, the trustee liquidating Madoff’s firm.
The agreement ended claims against Union Bancaire, which was accused of accused of profiting from Madoff’s Ponzi scheme. Union Bancaire and M-Invest didn’t admit any liability, according to the agreement.
“The suit has no merit and we will defend ourselves,” Ernst & Young said in a statement. Eric Seiler, an attorney representing M-Invest, didn’t return a phone message seeking comment on the suit.
Madoff, 73, is serving a 150-year sentence in a federal prison in North Carolina after admitting to directing the biggest Ponzi scheme in history. The Securities Investor Protection Corp. has said that investors in so-called feeder funds aren’t customers of Madoff’s firm and can’t make claims on the estate of the bankrupt brokerage.
The case is M-Invest Ltd. v. Ernst & Young LLP, 653353/2011, New York State Supreme Court (Manhattan).
To contact the reporter on this story: Chris Dolmetsch in New York at firstname.lastname@example.org.
To contact the editor responsible for this story: Michael Hytha at email@example.com.