Ivy Asset Management to Pay $210M in Settlement Over Madoff

Ivy Asset Management agreed to pay $210 million to settle lawsuits for advising clients to invest with Ponzi schemer Bernard Madoff, the New York attorney general said on Tuesday.

The New York-based investment adviser, a subsidiary of Bank of New York Mellon Corp, withheld damaging information about Madoff to make millions of dollars in fees, New York Attorney General Eric Schneiderman said in a statement.

Between 1998 and 2008, the firm was paid more than $40 million to conduct due diligence and advise clients regarding Madoff investments, Schneiderman said.

Clients lost more than $236 million when Madoff's Ponzi scheme collapsed, the statement said.

"Ivy deliberately concealed negative facts it uncovered," Schneiderman said in the statement. "As a result, its clients suffered massive and avoidable losses."

The New York attorney general's office sued Ivy in 2010 for fraud and breach of fiduciary duty. The settlement resolves litigation by the office, the U.S. Department of Labor and investors, Schneiderman said.

"Ivy is pleased to have reached an agreement that allows it to put these matters behind it," Douglas W. Squasoni, chief restructuring officer and chief investment officer, said in a statement. The firm is winding down.

In addition to the $210 million paid by Ivy, other defendants will pay $9 million, Schneiderman said.

Madoff pleaded guilty in March 2009 to perpetrating the largest Ponzi scheme in U.S. history and is serving a 150-year prison sentence.

Kevin Heine, a spokesman for Bank of New York Mellon, had no immediate comment.

BNY Mellon, the world's largest custody bank, has more legal battles ahead. The bank is fighting lawsuits from the New York attorney general and other U.S. authorities that accuse it of overcharging customers for foreign currency transactions.

The case is People of the State of New York v. Ivy Asset Management, 450489/2010, New York state Supreme Court, New York County.