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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