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Madoff victims receive second compensation from MVF en

Newsletter 07/2018
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In November 2013 all victims of the Madoff-fraud were invited to claim compensation from the Madoff Victim Fund (the “MVF”). The MVF initially had USD 4bn available for the purpose of making distributions to investors that suffered losses on their investments in Madoff feeder funds. Deminor subsequently filed over 4000 claims with the MVF on behalf of our clients. In November 2017 the MVF made a first distribution, bringing the majority of our clients to a baseline compensation of 25 percent of their eligible losses. Currently a second distribution is ongoing, which will bring the majority of our clients to a baseline compensation of 40 percent of their eligible losses.

From the moment the Madoff investment scandal became known to the public, Deminor stepped in to advise and assist investors, and we continue to be active in this matter today. We have syndicated thousands of investors worldwide, who suffered significant losses, as they made investments in so-called “Madoff feeder funds” (prominent examples of which are Herald Lux, Luxalpha, Thybo, the Fairfield funds and Hermes). Deminor advises and assists these clients with obtaining a compensation for their losses through active litigation and through the filing and management of their claims with the MVF.

The MVF itself was created through the efforts of the U.S. Attorney’s Office, which successfully forfeited a series of assets involved in the securities fraud.

The fund began its activity with capital of USD 2.35bn in November 2013. The fund’s capital was further increased to over USD 4bn in January 2014 with the addition of the proceeds from a payment by JP Morgan Chase Bank. This payment was part of a settlement agreement that the bank reached with the U.S. Department of Justice to avoid criminal charges.

In November 2017, the MVF announced that it would pay all investors who filed a timely claim and were eligible a compensation of 25 percent of their losses. Collateral recoveries received from other sources would be deducted from that compensation payment. Currently a second round of distributions from the MVF is ongoing, with collateral recoveries received by investors also taken into account here. This second round will bring the majority of our clients to a baseline compensation of 40 percent of their eligible losses.

USD 1.3 billion distributed so far

So far the MVF has distributed only USD 1.3 billion of the total of USD 4bn available to compensate victims. Further distributions are therefore expected in the future. Since the MVF has however indicated that claims with a very significant amount of claim value are still under review for approval, it is impossible to determine the amount of compensation of any future distribution(s).

We are delighted to report that almost all of our clients’ claims were accepted by the MVF, including those that were initially disputed or heavily challenged by the MVF. The outcome of the MVF claims filing process shows clearly that, although it may be a lengthy process, being active as an investor is no doubt worthwhile in the long-term.

Our goal is to continue using our best efforts to ensure that our clients obtain the highest compensation possible for their Madoff related losses.

 

Joeri Klein

Written on July 13, 2018 by

Joeri Klein

Co-responsible for the Dutch market regarding Damage Recovery Services. Head of research for Dutch collective proceedings and settlements. Co-responsible for Deminor distressed trading.

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