Liquidators for Fairfield Sentry Ltd., a feeder fund that invested in Bernard L. Madoff Investment Securities, filed suit against the Abu Dhabi Investment Authority to recover $300 million paid out of the fund in profits.
According to court documents filed April 1 in U.S. Bankruptcy Court in New York, representatives for Fairfield Sentry are using a process known in the hedge fund industry as a “clawback” to get refunds of money paid to investors, known as redemption payments, given the Madoff fraudulent Ponzi scheme that later was uncovered, the court filing stated.
The money is needed to meet the demands of a $3.2 billion lawsuit filed against Fairfield Sentry by Madoff trustee Irving Picard, according to the legal filing. “Unless redemption payments paid to shareholders are recovered for the funds’ estate, the funds will be unable to satisfy their liabilities and claims,” the court document said.
Fairfield Sentry is being liquidated in the British Virgin Islands and filed for U.S. bankruptcy protection last summer.
Euart Glendinning, a spokesman for the $625 billion Abu Dhabi Investment Authority, didn’t immediately respond to e-mails seeking comment outside of regular business hours in the United Arab Emirates.
The size of the sovereign wealth fund’s investment in Fairfield Sentry could not be learned, but an experienced hedge fund-of-funds manager who asked not to be identified speculated in an e-mail that “$300 million in profits that means they must have had $500 million-plus invested for a number of years.”
Bloomberg contributed to this story.