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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

“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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