Citigroup Latest Target for Madoff Trustee

March 3, 2011

First it was the New York Mets and J.P. Morgan, now Citi is the Madoff’s trustee’s latest target.  According to Bloomberg:

“Citi knew, and was on notice of, irregularities and problems concerning the trades reported by BLMIS, and strategically chose to ignore these concerns in order to continue to enrich themselves,” Picard said in the complaint, referring to Madoff’s firm, Bernard L. Madoff Investment Securities LLC.

Picard laid out in the complaint details of a lawsuit he filed under seal in December against New York-based Citigroup and other banks. He is demanding $425 million from Citigroup– money it received “in connection with” a loan to a Madoff feeder fund and a swap transaction with a Swiss hedge fund linked to a second feeder fund, Picard said.

Citi is denying the allegations, saying that it began unwinding the trades when it saw “red flags.”  Like I mentioned in the earlier posts, this is pretty typical stuff for bankruptcy trustees to pursue.  Big pockets = bigger possible recoveries.

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