Ex-Madoff trading unit deal closed

Last updated 08:32 19/06/2009

Relevant offers


US teen tycoon sells US$1 million in custom socks Desperate US homeowners facing foreclosure scammed out of their homes Hash browns in US recalled for possibly containing golf ball pieces Apple under pressure to deliver as Samsung's Galaxy S8 takes off Jamie Oliver's NZ plans uncertain as he narrowly avoids Australian collapse Celebrity chef Jamie Oliver's plan to salvage Australian restaurants avoids collapse in court Ban the bag: used to 12 minutes, a plastic bag takes 1000 years to break down Silicon Valley juicer Juicero may be feeling the squeeze Amazon's 'secret weapon': understanding how website experience can influence shoppers Sleep deprivation spurs $33 million Love To Dream business for Aussie mum

The sale of Bernard Madoff's former securities-trading unit for US$25.5 (NZ$40.93) million has been finalized, the new broker-dealer taking it over said, as officials continue to investigate the confessed swindler's massive global fraud.

New York-based Surge Trading Inc said in a statement it will operate on the same floor of the so-called Lipstick Building in Manhattan where the brokerage arm of Bernard L. Madoff Investment Securities LLC (BLMIS) ran its trading platform.

Surge was formerly known as Castor Pollux Securities Inc, the Boston firm that won the auction in April for the Madoff unit, which sold for a fraction of its former worth of about $1 billion. Officials said the unit was legitimate, unlike the investment arm at the centre of the $65 billion fraud.

"Surge Trading has also hired key personnel from the former BLMIS who supported that firm's successful market-making and proprietary trading businesses," the statement said.

Madoff, 71, pleaded guilty in March to orchestrating the fraudulent scheme over 20 years through the investment unit of the firm. Madoff, a former nonexecutive chairman of the Nasdaq stock market, was immediately jailed and is expected to spend the rest of his life in prison after sentencing on June 29.

The start of market-making operations by the new firm is subject to approval by the Financial Industry Regulatory Authority, or FINRA.

Executives of the former Madoff trading unit, which matched buyers and sellers of stocks, included Madoff's brother Peter and two of the swindler's sons, Mark and Andrew. They have denied knowledge of the fraud and have not been charged with any crime, although their assets have been frozen.

Stephen Sussman, a managing member of Regulatory Compliance LLC, a firm that worked on the deal's details, said it involved hundreds of hours examining records and filing documents with authorities, but he never met the Madoffs.

Sussman said by telephone he was aware that, "everything is being viewed under a microscope, that this is going to be looked at most closely, reviewed constantly, even though it is the legitimate branch."

Surge Trading's CEO is Frank Petrilli, former CEO of TD Waterhouse, the statement said. Darin Oliver, former CEO of Castor Pollux, will become President, while former Fidelity Brokerage Services LLC President Robert Mazzarella will serve as the nonexecutive Chairman.

The sale's proceeds will eventually go to Madoff's defrauded customers, according to the trustee winding down the brokerage. A lawyer for court-appointed trustee Irving Picard declined to comment on the deal, which was closed late on Wednesday.

Ad Feedback

Under the deal announced in April, Castor Pollux would pay $1 million at closing and up to $24.5 million in deferred compensation through December 2013.

- Reuters

Special offers

Featured Promotions

Sponsored Content