PricewaterhouseCoopers (PwC) has agreed to pay $55 million to settle claims brought by investors who suffered losses in the Bernard L. Madoff Investment Securities LLC Ponzi scheme.
The proposed settlement filed on Wednesday in New York federal court is now waiting for approval from Southern District Judge Victor Marrero. According to the proposal, PwC affiliates in Canada and the Netherlands would pay investors in Madoff feeder funds that were audited by PwC and managed by Fairfield Greenwich Group, New York Law Journal reported.
Fairfield Greenwich investors suffered big losses on the more than $7 billion of their money that was sent to Bernard L. Madoff Investment Securities LLC.
Bernard Madoff was pleaded guilty to fraud and other charges in 2009, and is serving a 150-year sentence. Madoff's victims include nearly 3,000 investors including inviduals and intitutions. The settlement would bring the plaintiffs' recovery to at least $235 million, which includes the $55 million proposed deal and prior settlement with fairfield Greenwich and hedge fund administrator Citco Group.
The investors alleged PwC was negligent in auditing Fairfield Sentry, Fairfield Sigma, Fairfield Lambda and Greenwich Sentry funds from 2002 to 2007.
The investors are represented by the law firms Boies, Schiller & Flexner, Wolf Popper, and Lovell Stewart Halebian Jacobson. The law firms plan to seek legal fees of 30 percent of the settlement fund, or up to $16.5 million, plus up to $2.5 million for expenses.
The defendants deny allegations of acting negligently in auditing the financial statements. PwC is represented by Kirkland & Ellis attorneys.
According to Reuters, PwC Canada said in a statement on Thursday that it believes strongly that the company's audit work complied with professional standards. But the company pursued a settlement to avoid uncertainties and unrecoverable legal costs of a lengthy jury trial.
In the prior settlements, U.S. District Judge Victor Marrero approved a $125 million settlement with the financial services company Citco Group Ltd in November. Marrero also approved a $80 million settlement Fairfield Greenwich Group in 2012, and $10 million settlement with GlobeOp Financial Services LLC in 2013, according to Daily Business Review.
Boies Schiller partner David Barrett said the PwC settlement would be the largest recovery on claims made by investors in Madoff feeder funds.
Earlier in 2012, PwC also made a large settlement of about $70 million with investors in an Australian shopping mall, who blamed partially on accounting errors when the company collapsed. The accounting giant also paid $225 million in 2007 to Tyco International investors, who alleged PwC had been negligent as an auditor.
