Reuters: Regulatory News: UPDATE 1-Madoff trustee seeks to block $410 mln Merkin accord

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UPDATE 1-Madoff trustee seeks to block $410 mln Merkin accord Aug 1st 2012, 19:59 Wed Aug 1, 2012 3:59pm EDT * NY AG Schneiderman settled with Merkin in June * Madoff trustee says settlement prejudices creditors * Schneiderman not immediately available for comment By Jonathan Stempel NEW YORK, Aug 1 (Reuters) - The trustee seeking money for victims of Bernard Madoff is trying to block a $410 million settlement resolving New York's claims against a hedge fund manager accused of secretly steering client money to the swindler. Irving Picard, the trustee, said on Wednesday that the settlement with financier Ezra Merkin interferes with his exclusive right to seek money for former customers of Bernard L. Madoff Investment Securities LLC. The pact also reduces the assets available to recover, the trustee said. New York Attorney General Eric Schneiderman announced the Merkin accord on June 24 after it won approval from a New York state judge. It is one of the largest settlements with any individual over Madoff's activities. Picard has sought more than $500 million from Merkin, and on Wednesday asked the U.S. Bankruptcy Court in Manhattan for an injunction to block Schneiderman's settlement. "It is clear that the remaining assets of the Merkin defendants will be insufficient to satisfy the trustee's claims," Picard wrote. "Such an outcome would be extraordinarily prejudicial to the creditors of the BLMIS estate." Representatives for Schneiderman did not immediately respond to requests for comment. Andrew Levander, a lawyer for Merkin, also did not immediately respond to a request for comment. Schneiderman had accused Merkin of "recklessly" feeding $2.4 billion from investors in his funds to Madoff, while falsely claiming that he had been actively managing the money. Picard has largely been successful in stopping Madoff victims and people acting on their behalf from pursuing their own cases, though some litigation is still pending. Last month, he agreed to mediation for a dispute over a $270 million lawsuit by California Attorney General Kamala Harris against the widow of Beverly Hills money manager Stanley Chais over Chais's dealings with Madoff. More than $1.1 billion has been distributed to Madoff victims. Last week, Picard asked U.S. Bankruptcy Judge Burton Lifland, who oversees the Madoff firm's liquidation, for permission to distribute as much as $2.4 billion more. Separately, the trustee's law firm on Wednesday asked Lifland for approval to bill $48.1 million of legal fees to pursue the Madoff cases for the four months ended Jan. 31, boosting total fees charged to about $321.2 million. The sum for the four months represents 134,431 hours of work at an average of $357.86 per hour, after a 10 percent discount, according to a court filing. The case are Picard v. Schneiderman et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-ap-01778; and Securities Investor Protection Corp v. Bernard L. Madoff Investment Securities LLC in the same court, No. 08-ap-01789. Link this Share this Digg this Email Reprints

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