Feeder Fund’s Role Eyed in Madoff Mess

Fairfield Greenwich Group is coming under scrutiny as being one of the participants that extended Madoff’s alleged fraud into Europe. In marketing materials, the investment firm touted Madoff’s seemingly straw-into-gold “algorithmic technology.”

The Securities and Exchange Commission, as part of an investigation into Mr. Madoff's activities, determined in 2006 that the fund, Fairfield Greenwich Group, hadn't properly disclosed that Mr. Madoff oversaw its investment decisions, according to an SEC document, though the agency found no evidence of fraud.

Since then, Fairfield Greenwich has in marketing documents touted its close relationship with Mr. Madoff -- and in the process raised about $1.7 billion from investors in the U.S. and Europe. This marketing effort ultimately broadened the scope of Mr. Madoff's alleged fraud far from his bases in New York and Florida.

There is no suggestion that Fairfield knew of Mr. Madoff's improper activities. A Fairfield spokesman says the firm trusted Mr. Madoff after a 19-year relationship and conducted due diligence of his activities.

The spotlight on Fairfield comes as prosecutors and regulators attempt to unravel Mr. Madoff's alleged fraud; he has told investigators he conducted a $50 billion Ponzi scheme in which he paid investors returns from subsequent client money he raised.

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