Massachusetts regulators charged Fairfield Greenwich Group with fraud today, the Wall Street Journal reports, saying it failed in its fiduciary duties by funneling money into Bernard Madoff’s Ponzi scheme. Fairfield was one of Madoff’s top feeder funds, and there was a “profound disparity between the due diligence that Fairfield represented to its investors…and the due diligence it actually conducted,” said the Secretary of the Commonwealth.
The complaint also alleges that Madoff coached Fairfield on how to handle questions from the SEC. The charges aren’t criminal, but they’re the first action to be taken against any of the so-called feeder funds, which gave investors access to the Madoff’s supposedly exclusive products. Fairfield had about $7 billion invested with Madoff. The state wants restitution for Massachusetts residents for their losses and fees.