Apparently a substantial amount of the money that comprised the Ponzi fund of Bernard Madoff was generated by third party advisers who recommended their clients invest with Madoff, or so called "Placement Agents" who enabled the Madoff investments.   Historically, in finance, a Placement Agent is an individual, or, more frequently, a firm, that assists entrepreneurs or private companies looking to raise private equity or other capital through a so called private placement.  However, the term was also used to denote firms or individuals with connections to the securities firm Bernard L. Madoff Investment Securities LLC, who were able to facilitate investments with the firm for high net worth clients.  As such, these Placement Agents acted as intermediaries between high net worth investors and the Ponzi scheme run by Madoff.  Such Placement Agents, of course, earned fees for their services.  If they also acted as advisers to investors, they owed their clients a fiduciary duty.

It is very likely that claims made against Madoff and his firm will be waylaid in labyrinthine legal proceedings that may last a decade or more and result in pennies on the dollar, if anything.  However, investor claims involving third party Advisers or Placement Agents can be expected to proceed relatively quickly and have the potential to generate better results.  Advisers and Placement Agents may be held liable for investor losses if their conduct did not meet the applicable standard of care, or if they engaged in negligence or dishonest conduct.  Advisers and Placement Agents may also have insurance that may cover investor claims.

If you have questions regarding Madoff losses, please feel free to give us a call at 1-800-306-6010 or contact us online.