RSS icon

Top Stories

Union Fund Sues Over Madoff Investment

February 17, 2009
Reprints
The Pension Fund for Hospital and Health Care Employees, District 1199C, Philadelphia, filed a class-action suit Thursday, February 12, against Austin Capital Management in U.S. District Court in Philadelphia over investment losses tied to Bernard Madoff.

The suit filed on behalf of the $295 million defined-benefit plan alleges that Austin breached its fiduciary duty under ERISA with regard to an investment in a Tremont Holdings Rye Investments fund that invested solely in Bernard L. Madoff Investment Securities.

Madoff was charged in December with allegedly operating a $50 billion Ponzi scheme.

The suit seeks restitution of lost assets and legal costs. The Philadelphia Hospital and Healthcare Workers fund had $700,000 of exposure to Madoff within its $10 million mandate to an Austin Capital Management hedge fund of funds, said Theodore M. Lieverman, lead attorney and a partner at Spector Roseman Kodroff & Willis, law firm for the plaintiffs.

David Friedman, managing director and COO of Austin Capital Management, did not return a call seeking comment.

According to the complaint, Marco Consulting Group was authorized in February 2008 to “be the fund’s investment fiduciary and to determine overall investment allocations.” In June, after conducting due diligence, “Marco retained Austin for the purpose of managing a portion of the fund’s investment assets,” said court documents.

Marco was not named as a defendant in the complaint. Richard Graf, Marco’s president, did not return a call seeking comment.

Filed by Christine Williamson of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter.
 

Comments powered by Disqus

Recruiting