The trustee seeking money for victims of Bernard Madoff was barred on Monday from blocking a $410 million settlement resolving New York state's claims against Wall Street hedge fund manager Ezra Merkin, who was accused of secretly steering client money to the swindler.

Irving Picard, the trustee, had said the settlement with New York Attorney Eric Schneiderman interfered with his exclusive right to seek money for Madoff's victims.

But U.S. District Judge Jed Rakoff said Picard waited too long by taking more than three years after the attorney general's office moved against Merkin to intervene.

"The trustee unreasonably and inexcusably slept on his rights," Rakoff said.

(Reporting by Jonathan Stempel in New York; Editing by Gary Hill)