Madoff Must Reveal All Assets by New Year’s Eve, Judge Rules

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By Erik Larson

Dec. 27 (Bloomberg) -- Investors looking to recoup some of the $50 billion they lost in Bernard Madoff’s alleged Ponzi scheme may get a better idea what the New York financial adviser has left when he is forced to reveal his assets to regulators.

Madoff, 70, must provide a detailed list of all investments, loans, lines of credit, business interests, brokerage accounts and other holdings to the Securities and Exchange Commission by New Year’s Eve, a federal judge ruled. Madoff’s foreign business units were given until Jan. 26 to provide a similar accounting.

The list is to include all assets held for his “direct or indirect benefit,” U.S. District Judge Louis Stanton in Manhattan wrote in a Dec. 18 order in the SEC lawsuit against Madoff. The list must describe “the source, amount, disposition and current location of each of the items listed.”

A catalog of Madoff’s assets may reveal targets for angry investors including hedge funds and charities seeking the return of their funds. New York-based Bernard L. Madoff Investment Securities LLC began liquidating after his Dec. 11 arrest for securities fraud. Madoff, under house arrest in his Manhattan apartment, faces as much as 10 years in prison and a $5 million fine if convicted.

Several investors filed proposed class-action, or group lawsuits against Madoff and his firm following FBI allegations that he admitted the business was “one big lie.”

Investment Firms

Investment firms that did business with Madoff have also been sued. New York University said it lost $24 million in investments managed by Madoff, according to a lawsuit filed Dec. 23 in New York state court in Manhattan against fund manager J. Ezra Merkin and his Gabriel Capital LP fund and Ariel Fund Ltd. The school alleged Merkin invested NYU’s money with Madoff without telling investors or performing proper due diligence.

In a separate proposed class-action against Merkin, who is also the chairman of auto lender GMAC LLC, Harry Susman, a lawyer for The Calibre Fund, alleged he misled investors by claiming to have put investor money in a “diverse portfolio of securities.”

Gabriel Capital LP, a $1.5 billion fund, plans to liquidate due to Madoff losses, Merkin said in a Dec. 18 investor letter. The fund lost 39 percent this year through Nov. 30, mirroring the drop in the S&P 500 Index. Merkin told Ariel investors it also plans to wind down in light of the losses from the Madoff fraud, according to the NYU lawsuit.

Merkin’s Lawyer

Merkin’s lawyer, Andrew Levander, didn’t immediately return a call seeking comment.

Madoff’s firm was the 23rd-largest market maker on Nasdaq in October, handling an average of about 50 million shares a day, according to exchange data. It took orders from online brokers for some of the largest U.S. companies, including General Electric Co. and Citigroup Inc.

Federal prosecutors alleged Madoff engaged in a classic Ponzi scheme in which he would pay off old investors with the money of new investors.

His lawyer, Ira Sorkin, didn’t return a call seeking comment.

Madoff, who hasn’t formally responded to the securities fraud charge, is due in court Jan. 12, unless he is indicted before then. Prosecutors and defense lawyers may also agree to postpone the court date.

In a Dec. 18 interview, Sorkin said Madoff’s company is cooperating with the government. Madoff met with prosecutors earlier this month, according to people familiar with the case.

Asset List

A list of Madoff’s assets has yet to be filed, according to electronic federal court records. It’s unclear whether such an accounting will be made available to Madoff investors.

SEC spokesman John Nester didn’t return a call or e-mail seeking comment after business hours. SEC lawyer Alexander Vasilescu didn’t return an e-mail after business hours.

The NYU lawsuit added to a growing list of alleged victims of Madoff, including Liliane Bettencourt, the world’s wealthiest woman and the daughter of L’Oreal SA founder Eugene Schueller; Spanish billionaire Alicia Koplowitz; U.S. filmmaker Steven Spielberg; Nobel laureate Elie Wiesel; and Yeshiva University.

New York-based money manager Thierry Magon de La Villehuchet, who may have lost $1.4 billion of client funds invested with Madoff, was found dead in his Manhattan office Dec. 23 in what police said was an apparent suicide.

The New York City Medical Examiner said Dec. 24 it had completed an autopsy of de La Villehuchet, a co-founder and chief executive officer of Access International Advisors, and that results will be returned next week.

Bettencourt, the L’Oreal heiress, invested part of her $22.9 billion fortune with Madoff through de La Villehuchet, according to two people familiar with the matter.

The case is Securities and Exchange Commission v. Madoff, 08-cv-10791, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net.

Last Updated: December 27, 2008 00:01 EST

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British Pound Outlook Remains Bearish as Growth Forecasts Weaken Further

Friday, 26 December 2008 14:41:32 GMT

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Previous Articles

• Dec 26 - British Pound Outlook Remains Bearish as Growth Forecasts Weaken Further
• Dec 23 - Euro Holds Near Record Highs Versus British Pound, Both Remain Under Pressure Against US Dollar
• Dec 22 - Euro Holds Near Record Highs Versus British Pound, Both Remain Under Pressure Against US Dollar
• Dec 22 - British Pound/US Dollar Exchange Rate Forecast
• Dec 19 - British Pound the Worst Performer in G10 on Dismal Economic Data
• Dec 18 - British Pound Plunges to Record Low Versus Euro, Swiss Franc
• Dec 16 - British Pound Outlook May Hinge on the Bank of England's December Meeting Minutes
• Dec 15 - British Pound Continues to Reach New Lows vs Euro, UK CPI Could Weigh on GBP/USD
• Dec 12 - Pound Maintains Bearish Outlook vs. Euro, Dollar Ahead of BOE Minutes
• Dec 12 - British Pound Hits Fresh Record Low Versus Euro, BOE Meeting Minutes May Make or Break Cable Next Week
• Dec 11 - British Pound Falls to Record Low Versus Euro - Will These Moves Continue?
• Dec 10 - British Pound Faces Heavy Resistance at 1.49, BOE's Biggest Dove to Step Down in May 2009
• Dec 06 - Pound Threatens Six Year Lows As UK Recession Paces Global Decline
• Dec 05 - Euro And Pound Struggle To Keep Their Footing As Multi-Year Lows Draw Closer
• Dec 03 - Euro and British Pound Outlooks Hinge Upon ECB, BOE Rate Decision - What Will They Do?
• Dec 02 - British Pound Remains Under Pressure Ahead of BOE Rate Cut as UK Construction PMI Falls to Record Low
• Dec 01 - British Pound Holds Above Support at 1.4805, Downside Risks Loom
• Nov 28 - British Pound Outlook Remains Bearish Ahead of Bank of England Cuts
• Nov 26 - British Pound Sees Mixed Session As Fundamental Traders Weigh In On Dour GDP Revision
• Nov 26 - British Pound/US Dollar Exchange Rate Forecast

Written by David Song, Currency Analyst

The British Pound continued its move towards parity against the Euro and slid lower against the U.S. Dollar ahead of the New Year, which suggests that investors remain bearish against the currency as market participants widely expect the Bank of England to lower borrowing costs even further in January.

British Pound Outlook Remains Bearish as Growth Forecasts Weaken Further

Fundamental Outlook for British Pound: Bearish

- 3Q GDP Revised to -0.6% from -0.5%
- British Pound Tests Record Low Against Euro

The British Pound continued its move towards parity against the Euro and slid lower against the U.S. Dollar ahead of the New Year, which suggests that investors remain bearish against the currency as market participants widely expect the Bank of England to lower borrowing costs even further in January. Nevertheless, financial uncertainties paired with the ongoing downturn in the housing sector is likely to stoke increased selling pressures for the currency over the near-term as the economic calendar continues to reflect a dour outlook for growth.

The lowest interest rate since 1951 highlights the extraordinary efforts taken on by the central bank, and market participants anticipate policymakers to ease policy further as they do everything possible within their authority to mitigate the downturn in the economy. A Bloomberg News survey shows that 27 of the 38 economists polled anticipate BoE Governor Mervyn King and Co. to lower the benchmark interest rate by 50bp to 1.50% at the January 8th policy meeting. Meanwhile, weakening fundamentals have certainly dragged on the British Pound throughout the second half of the year, and the event risks scheduled for the following week could weigh on the currency as growth prospects deteriorate at a rapid pace. The BoE’s housing equity withdrawals index is projected to fall to -3.3B from -2.8B in the second quarter as a result of tumbling home prices paired with tightening lending practices, while consumer credit is expected to decline to 0.6B from 0.8B in October. As credit conditions remain far from normal, private sector spending, which is one of the biggest drivers of growth, is likely to remain subdued throughout the coming months, and would only heighten the downside risks for growth going forward.

From a technical standpoint, the British Pound is expected to remain range-bound in the week ahead, and should hold major trends against its currency counterparts over the near-term. Accordingly, as investors round-trip their open positions for the year, thin markets are unlikely to impel a drastic shift in trader sentiment, and the Sterling is likely to face headwinds ahead of the event risks scheduled for the coming week.

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