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March 31, 2010

KPMG cleared in Madoff feeder fund court case

A case against KPMG US regarding its audits of a feeder fund into Bernard Madoff’s $65 billion Ponzi scheme has been dismissed.

The Meridian Horizon Fund and other affiliated hedge funds that invested assets into a feeder fund for Madoff, run by Tremont Partners, accused the firm of professional negligence in April 2009.

Meridian Horizon Fund claimed that KPMG, which audited the Tremont funds in 2006 and 2007, issued false and misleading audit opinions.

Meridian alleged that if KPMG had investigated Madoff’s auditor, Friehling & Horowitz, it would have known the audits of Madoff’s firm were fraudulently produced.

However, on Wednesday this week US District Court Judge Thomas Griesa said the audit firm could not be sued in the case because it lacked actual intent to deceive, manipulate or defraud the investors in the funds that brought the suit, Reuters reported.

“Merely alleging that the auditor had access to the information by which it could have discovered the fraud is not sufficient,” Judge Griesa wrote.

 

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