Wide legal spectrum for Madoff claims

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Messy legal battles involving investor claims is likely to break new legal ground involving jurisdiction disputes, insurance, bankruptcy and international finance."  Unraveling the complex scheme will produce legal actions or many varieties and impacting many areas of law.

A primary issue will be attempts by the bankruptcy court to reclaim improper payouts to early investors, a process known as "clawback."  [See "Madoff investors may be on the hook for 'clawback' suits."]   But the issues do not stop there.   An interesting nuance is the fate of funds sent out of the United States.  Many Madoff investors were funds and investors based in Europe.

"'Will that result in a tug of war between aggrieved European investors and aggrieved U.S. investors?,' asked Howard Kleinhandler, a partner at Wachtel & Masyr in New York."

Other potential areas of controversy include suits and allegations involving:

• Funds sent out of the United States
• Difference in state laws regarding how far back the clawwbacks may go
• Defining a "fraudulent conveyance" of payments by Madoff to early investors
• Potential liquidations of offshore feeder funds if they can't repay investor claims
• Recovery from a federal program designed to repay victims of failed brokerages
• Negligence of feeder funds worldwide for failure to uncover Madoff's alleged fraud

See full article:  A new legal industry: Madoff

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