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Sunday, May 3, 2009

Fairfield Greenwich Rejects Fraud Allegations

The largest "feeder fund" to Bernard Madoff's fraudulent investment scheme rejected Wednesday allegations by Massachusetts regulators who say it misled investors in its knowledge of Madoff's business.

Connecticut-based Fairfield Greenwich Group, whose Sentry funds lost $7.2 billion to Madoff, said the fraud allegations were "so filled with errors and factual distortions as to completely misstate the conduct" of the firm.

Madoff, 71, a former chairman of the Nasdaq stock market, was arrested on Dec. 11 and pleaded guilty on March 12 to charges accusing him of perpetrating a fraud worth as much $65 billion over 20 years. He is in jail pending sentencing.

Fairfield said consistent returns and low volatility from Madoff were expected given his supposed trading strategy, known as a "split strike conversion", along with Madoff's other supposed strategies including investments in Treasury bills.

Galvin's complaint said Madoff coached Fairfield executives, who once managed about $14 billion, on how to respond to questions from the Securities and Exchange Commissions in 2005.

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