Hagens Berman Files Class-Action Against Tremont and Rye Funds, Alleges Company Gave Away Capital to Madoff


SEATTLE – Hagens Berman Sobol Shapiro LLP filed a class-action lawsuit in a United States District Court in New York against Tremont Group Holdings (Tremont), its Rye Investment Funds, Oppenheimer Acquisition Corporation, OppenheimerFunds, which owns Tremont, Massachusetts Mutual Life Insurance Company, a majority owner of OppenheimerFunds and KPMG LLP, Tremont's auditor. The suit filed on behalf of individuals and groups that invested capital with Tremont, alleges defendants grossly neglected fiduciary duties by turning capital over to Bernard Madoff Investment Securities (BMIS) that used the capital to run a massive Ponzi scheme.

The complaint claims that Tremont and other affiliated entities failed to perform proper due diligence and failed to vet, monitor, oversee, and safeguard Plaintiffs' investments, before handing all of it over to Madoff. As a result, Tremont clients lost a total of $3.3 billion in assets, $3.1 billion from the Rye Funds.

Plaintiffs allege Tremont turned over virtually all capital invested in its Rye Funds, estimated at $3.1 billion, to Madoff. While relinquishing management to Madoff, Tremont continued to receive management fees from clients. The company provided account statements and other documentation that made it appear as though Tremont had active oversight of clients' capital.

HBSS represents investors and groups that used Tremont to invest capital. The firm continues to examine other feeder funds that turned capital investments over to Madoff.

The Tremont lawsuit alleges the company unfairly, unlawfully, and deceptively neglected and abandoned professional oversight of capital by passing it on to Madoff without adequate safeguards. Madoff then used that capital to pay bogus returns to other investors.

In the weeks leading up to the collapse of the Madoff scheme, Tremont aggressively sold new investments in the Rye Funds, the suit alleges. Tremont suggested to investors that they had 'better move and move quick' if they wanted a 'chance' to invest in the Rye Funds. The complaint claims Tremont marketed the funds as providing more return for less risk. Marketing materials allegedly portrayed year-to-date returns from 1998 to 2008 ranging from eight percent to 16 percent.

Tremont's auditing service, KPMG LLP, is also a defendant in the lawsuit. The complaint alleges KMPG failed to use due care when auditing Tremont's financial reports for the Rye Funds.

If you wish to join this suit, discuss this action, or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, Steve Berman at 206-623-7292 or Reed Kathrein at 510-725-3000 or via e-mail madoff@hbsslaw.com. You can view a copy of the complaint as filed or join this class action online at http://hbsslaw.com/cases/tremont.

Hagens Berman Sobol Shapiro, a law firm with offices in Seattle, San Francisco, Los Angeles, Boston, Chicago, Phoenix and New York, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations.

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09/20/11: 09/20/11 Judge Approves $100 Million Settlement

The judge in the case has granted final approval to a $100 million settlement. The claims period has ended.

04/05/11: Judge Approves Notices

The judge in the case has ruled that the plaintiffs may send notices to the class informing them of the settlement. The judge also ordered that The Garden City Group, Inc. will serve as the Notice and Claims administrator to oversee the notice procedure and the disbursement of the settlement.

02/25/11: Motion Filed Requesting Court Set Hearing Date

A motion was filed in the Tremont securities lawsuit today requesting that the Court set a final hearing date in order to grant preliminary approval of the proposed settlement, including a proposed plan to disseminate Notices, when approved.

Attorneys representing plaintiffs in the lawsuit against Tremont Holdings Group, Inc. issued a memorandum in support of the proposed settlement. In addition to the motion for preliminary approval for the proposed settlement, attorneys filed a stipulation of partial settlement, which details information for the creation of a settlement fund.

03/26/09: HBSS Appointed Co-Lead Counsel

Today the U.S. District Court in New York appointed HBSS co-lead counsel for the state law cases. This category includes a total of four cases for consolidation.

The court also consolidated a handful of cases filed against Tremont Group Holdings. The court separated cases into three categories - claims under federal securities laws, state law actions and insurance actions.

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