Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, June 1, 2010

Arbitration Panel Awards Merkin Investor $1.75 Million for Madoff Losses

An investor in a feeder fund for Bernard Madoff run by Ezra Merkin was awarded $1.75 million in a AAA arbitration.  An unusual aspect is that both the majority and the dissenting arbitrator provided a written explanation for their decisions, which have become publicly available.  The Chair stated that because the claimant requested a reasoned award and given the substantial damages sought and the time and resources put into the case, he felt the parties deserve to know how the panel evaluated the evidence and came to its award.  The majority found that Merkin intentionally breached his fiduciary duties to the claimant by failing to disclose the fund's integral association with Madoff.  It found that Merkin was negligent (but not grossly negligent) in his oversight over the investment and so was not liable under the investment agreement.(Download 1 75M ARBITRAL AWARD V EZRA MERKIN)

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