BREAKING NEWS

Judge blocks Madoff bankruptcy trustee’s suit against banks

By JTA

JULY 30, 2011 09:06

A federal judge ruled that the trustee charged with recovering assets lost in Bernard Madoff’s Ponzi scheme does not have standing to sue banks and other institutions on behalf of victims for failing to detect the fraud.

In a ruling issued Thursday, United States District Judge Jed Rakoff said that the bankruptcy trustee, Irving Picard, cannot make claims against third parties for money that was not received from Madoff.

In addition to trying to recoup funds from Madoff investors who had received payouts in excess of their deposits, Picard has sued banks and other entities that helped to funnel money to Madoff’s operations. Picard has argued that such banks violated their duties to investors by ignoring evidence that Madoff was engaged in a fraud.

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