MANHATTAN (CN) - PricewaterhouseCoopers and Citco lack standing to contest the terms of a $50.3 million settlement that an investor class reached with a feeder fund linked to Bernie Madoff's enormous Ponzi scheme, the 2nd Circuit ruled Friday.
Fairfield Greenwich Ltd., a hedge fund that reportedly funneled $7 billion into Madoff's fraud, was sued by its investors a month after the Ponzi schemer's December 2008 arrest.
The lawsuit also leveled federal and state allegations at its accountants, PricewaterhouseCoopers, as well as Citco and GlobeOp, which offered other financial services to the hedge fund.
A settlement that the investors reached with GlobeOp late last year is not related to the appellate court's most recent decision.
Fairfield had agreed in November 2012 to resolve the investors' lawsuit for $50.3 million, plus an additional $30 million if that money is not used to resolve other legal claims, Bloomberg reported at the time.
Before the settlement was approved, lawyers tweaked the language of a clause regarding investors submitting to a New York court's jurisdiction in order to collect. Foreign investors worried that this stipulation would leave them open to claw-back actions by Madoff trustee Irving Picard.
U.S. District Judge Victor Marrero approved the terms of the revised settlement, which limited this vulnerability.
Appealing this green light, holdouts PricewaterhouseCoopers and Citco "contended that they were currently facing claims in litigation in the Netherlands and were entitled to argue that any entity that participated in the New York settlement could not pursue claims in any other jurisdiction," the 2nd Circuit summarized Friday.
Writing for a three-judge panel, Judge Barrington Parker dismissed this argument.
"Nothing in the final order precludes the non-settling defendants from asserting in the District Court or in other litigation any claims or defenses that may be available to them," the 14-page opinion states. "Similarly, nothing in that order requires that they forbear from asserting in the Dutch proceedings, or in any future proceedings in other courts, that participation in the settlement approved by the district court bars subsequent or parallel proceedings."
Lawyers for Fairfield and PricewaterhouseCoopers did not immediately respond to a request for comment.