DoL Provides Guidance for Madoff-Maimed Plans

February 5, 2009 ( - With an expanding list of retirement plans snared by investments tied to Bernard L. Madoff, the Labor Department has published some guidance for plan sponsors.

Apparently the DoL has been getting calls on the subject.   In announcing the guidance, the Labor Department noted that “Recent events regarding Bernard L. Madoff Investment Securities LLC have resulted in fiduciaries, investment managers and other investment service providers asking the Department of Labor about steps they should be taking in connection with employee benefit plans they believe may have exposure to losses as a result of plan assets being invested with Madoff entities.”


Granted, the “guidance” is largely a common sense recitation of what any fiduciary, charged with responsibility for the assets of others, would be expected to do under the circumstances.   In fact, the Labor Department goes so far as to say that ERISA fiduciaries “…should address these events in a manner consistent with their fiduciary duties of prudence and loyalty to the plan’s participants and beneficiaries.”

Essentially, the guidance boils down to this:   once you have determined that plan assets were invested with Madoff entities, and it seems that material losses are likely, “appropriate steps should be taken to assess and protect the interests of the plan and its participants and beneficiaries.”

Those steps, according to the  guidance , "may include":  

(1) requesting disclosures from investment managers, fund managers, and other investment intermediaries regarding the plan's potential exposure to Madoff-related losses,

(2) seeking advice regarding the likelihood of losses due to investments that may be at risk;

(3) making appropriate disclosures to other plan fiduciaries and plan participants and beneficiaries; and

(4) considering whether the plan has claims that are reasonably likely to lead to recovery of Madoff-related losses that should be asserted against responsible fiduciaries or other intermediaries who placed plan assets with Madoff entities, as well as claims against the Madoff bankruptcy estate.

The guidance goes on to note that fiduciaries must ensure that claims are filed in accordance with applicable filing deadlines such as those applicable to bankruptcy claims and for coverage by the Securities Investor Protection Corporation (SIPC) - and goes on to say that the web site of the court-appointed trustee for the liquidation of Bernard L. Madoff Investment Securities LLC, contains the liquidation notice, claim forms and related claims information, and deadlines for the filing of claims with the trustee.

The bankruptcy trustee, in a  January 5 announcement , noted that "Although SIPA (Securities Investor Protection Act (SIPA) requires the trustee to provide notice of a liquidation proceeding to persons who appear to have been customers of the debtor with open accounts within the past 12 months, any person may file a claim."   The bankruptcy trustee says that "over 8,000 customer claim forms, with detailed instructions for the completion and filing of the forms with the trustee; claim forms and related information to general creditors of BLMIS; and claims filing information to brokers and dealers," was mailed on January 2.  

It also noted that the deadlines for the filing of claims with the trustee are March 4, 2009 and July 2, 2009. "Close attention should be paid to the deadlines as they are set by court order and by law," according to the announcement.   "A failure to file a claim by the final deadline, even if by one day, will result in a denial of the claim."

The web address for the bankruptcy trustee is .   Additional information can be found at .

February 2, 2009 ( - Officials with the Louisiana State Police Retirement System and New Orleans City Employees' Retirement System say they each may have lost $400,000 in investments tied to Bernard L. Madoff.   The Times-Picayune reports that the State Police Retirement System learned the day before Christmas that Union Bancaire Privee, a Swiss private bank, had deposited as much as $400,000 of its money with Ascot Partners, a $1.8 billion hedge fund invested almost entirely with Bernard L. Madoff Investment Securities.

January 26, 2009 ( - Members of Local 210 of the Laborers International Union of North America in New York received letters last week informing them their pension funds were invested directly with Bernard L. Madoff's firm and through investments managed by Madoff.

January 20, 2009 ( - Missouri State Treasurer Clint Zweifel has called for a thorough investigation of the circumstances under which the Missouri State Employees' Retirement System (MOSERS) suffered a $3.5-million loss in an investment related to accused fraud mastermind Bernad Madoff.

January 20, 2009 ( - Members of the United Union of Roofers Waterproofers & Allied Workers Local 195 in Cicero, New York, learned this past weekend of the impact the Madoff scandal has had on their pension program.

January 12, 2009 ( - The Fort Worth Retirement Fund could find itself stung by an investment it no longer holds.

January 8, 2009 ( -In Central New York, the United Union of Roofers Waterproofers & Allied Workers Local 195 in Cicero, Plumbers & Steamfitters Local 73 in Oswego; and the Empire State Carpenters Fringe Benefit Funds recently sent letters telling members they lost money in investments with Madoff, according to the Syracuse Post-Standard.

January 5, 2009 ( - The pension fund for Baltimore police and fire employees lost about $3.5 million invested in a fund with ties to fallen money manager Bernard L. Madoff.

December 24, 2008 ( - New York hedge fund executive Ezra Merkin has been sued again for entrusting investments with confessed swindler Bernard Madoff, this time by New York University, which said it lost about $24 million.

December 19, 2008 ( - The list of retirement plan victims of a huge Ponzi scheme authorities claim was run by Bernard L. Madoff continues to grow with word that the entire profit-sharing plan run by suburban Minneapolis drugmaker Upsher-Smith Laboratories had been placed with Madoff's firm.

December 19, 2008 ( -About 100 employees at Sterling Properties in St. Louis had the option of investing with Madoff through their 401(k) plans, and dozens did so, a company official told the St. Louis Post-Dispatch. Investing with Madoff was one of several options in Sterling Properties' 401(k) plan, and employees also had the option of investing with Madoff outside their 401(k) accounts.

December 15, 2008 ( - Among the apparent victims of a $50-billion Ponzi scheme which authorities charge was orchestrated by Wall Street trader Bernard L. Madoff, is the town of Fairfield, Connecticut's pension fund, which had $42 million invested with Madoff.

Irving Picard, the trustee overseeing the liquidation of Madoff's firm in bankruptcy court, has filed a list of Madoff investors whose names and home addresses were filed with the bankruptcy court.  

The list is  HERE