|Photo from NY Times|
Merkin has now settled part of the lawsuits against him for claiming to actively manage his funds and then giving Madoff the money. Here are some details from the NY Times...
- Merkin agreed to pay $410 million with $5 million going to the state and the rest going to investors.
- The settlement settles a civil fraud case but does not affect other lawsuits against Merkin for his dealings with Madoff including a suit by the Madoff trustee, Irving Picard. Here is a quote from the NY Times
"The agreement settles a civil fraud case that the attorney general’s office filed against Mr. Merkin in April 2009. That case accused Mr. Merkin of deceiving his clients by collecting hundreds of millions of dollars in management fees when, in fact, he was simply handing money over to Mr. Madoff, not managing it himself."
- The settlement will benefit only the investors in Merkin's funds. As such, the Madoff trustee, Irving Picard will likely challenge the settlement.
- A complicated formula is given to determine how to distribute the funds. The distribution appears to give more money to those who were unaware that Merkin was giving the money to Madoff.
This sounds like an ugly mess to me and I seriously doubt Merkin will get away with his attempt to give money back to his friends. I think we'll be reading more about Merkin as Irving Picard tries to get a hold of these funds and clawback more to give to all the Madoff investors.