Tremont Group

Last updated
Tremont Group
Type Hedge fund
Industry Asset Management
Founded1985
FounderSandra Manzke
Headquarters
Rye, New York
,
U.S.
ServicesHedge fund group
Parent Massachusetts Mutual Life Insurance Company
Divisions Rye Investment Management
Website tremont.com

Tremont Group Holdings, Inc., a Delaware corporation headquartered in Rye, New York, is a hedge fund group with a subsidiary that advised a feeder fund to Bernard Madoff's investment advisory firm in the Madoff investment scandal. [1] [2] [3] [4] [5] [6] this was the second-largest feeder fund to Madoff's firm due to the group having had a long professional relationship with him as Chairman of the NASD, the precursor to FINRA, and as the largest options market maker on the NASDAQ.The firm was one of the largest hedge fund consultants and advisors globally during the seminal 1990's period and pioneered a number of ground breaking products such as the CSFB Tremont Hedge Fund Index, specialized products and venues for hedge fund investment; structured products, insurance entities, new markets and jurisdictions including the first institutional fund of hedge funds in Korea and the foundation of The Bermuda Stock exchange. Prominent board members and shareholders included; Mario Gabelli of Gabelli Asset Management, Leon Cooperman of Omega Advisors and Arthur Samberg of Pequot Capital Management. Tremont was among the first investors and/or involved in the launch or restructuring of numerous legendary funds such as; S.A.C., Quantum and AQR.

Contents

History

Tremont Group was founded in 1985 by money manager Sandra Manzke, who was its chief executive officer from May 1994 to August 2000, and co-CEO until 2005. [7] [8] [9] It owns Tremont Partners and Tremont Capital Management (formerly Tremont Advisers), a consultant, advisor and hedge fund of funds. [9] [10] Tremont Holdings also has offices in London, Toronto, and Hong Kong. [11] [12] Its subsidiaries are regulated by the U.S.'s Securities and Exchange Commission and National Association of Securities Dealers, the U.K.'s Financial Services Authority, the Ontario Securities Commission, and the Hong Kong Securities and Futures Commission. [11] The firm previously partly owned Tremont International Insurance and Tremont Bermuda Ltd.

Tremont Group invested with Madoff starting in 1997 via its Rye Investment Management division, headquartered in Rye, New York. Tremont Group closed the Rye Investment Management division in January 2009. [5] [8] [13] [14] [15]

Massachusetts Mutual Life Insurance Company's Oppenheimer Funds Inc. unit paid $140 million to purchase Tremont from Manzke in 2001. [13] [14] [16] [17] Manzke left Tremont in 2005. [18]

In January 2006, Rupert A. Allan became President of Tremont Group. [11] In June 2007, he was also named CEO of Tremont Group, replacing Schulman, who remained chairman of Tremont Group until his retirement in July 2008. [11] [15] [19]

Madoff scheme fallout

The hedge fund lost $3.3 billion, representing more than half its assets, in the Madoff investment scandal. [20] [21] [22]

When the scheme was uncovered in December 2008, Brad Alford, who runs Alpha Capital Management LLC, which helps clients choose hedge funds, said:

It's mind-boggling that people like Tremont ... had been doing this for so long. It's the job of these funds of funds to be doing due diligence. That's why they get paid. [23]

Madoff scheme litigation

In April 2010, Judge Thomas Griesa, of the U.S. District Court for the Southern District of New York dismissed a lawsuit by Tremont Group investors against Tremont's auditor, KPMG, which charged that KPMG had failed to discover the fraud in its audits of Tremont and was therefore liable to the investor. [24] Judge Griesa held that KPMG could not be sued, because there was no intent to deceive. [24] He wrote: "Merely alleging that the auditor had access to the information by which it could have discovered the fraud is not sufficient." [24]

In December 2010, Irving Picard, the court-appointed trustee in the Madoff bankruptcy, sued Tremont for over $3 billion in customer money that Tremont lost by investing with Madoff. [14] The lawsuit alleged that Tremont failed to perform independent, reasonable, and meaningful due diligence of Madoff. [14] [25] In July 2011, Tremont Group agreed to settle the lawsuit by paying a $1 billion cash settlement. [25] [26]

See also

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References

  1. ↑ Janet L. Sanders, Justice (January 26, 2012). "Askenazy v.Tremont Group Holdings; Opinion" (PDF). Superior Court of Massachusetts. Retrieved February 12, 2013.
  2. ↑ David E. Y. Sarna (2010). History of Greed: Financial Fraud from Tulip Mania to Bernie Madoff. John Wiley & Sons. p. 216. ISBN   9780470877708 . Retrieved February 12, 2013.
  3. ↑ Erin Arvedlund (2009). Too Good to Be True: The Rise and Fall of Bernie Madoff. Penguin Books. ISBN   9781101137789 . Retrieved February 12, 2013.
  4. ↑ David Callahan (2010). Fortunes of Change: The Rise of the Liberal Rich and the Remaking of America . John Wiley & Sons. p.  40 . Retrieved February 12, 2013. Tremont Group.
  5. 1 2 Parsons, Vice Chancellor (December 20, 2012). "Metropolitan Life v. Tremont Group Holdings; Opinion". Delaware Court of Chancery. Retrieved February 12, 2013.
  6. ↑ Johnson, J., Mallano, P. J.Chaney, J. (March 23, 2011). "White v. Manzke". CA Court of Appeal. Retrieved February 12, 2013.{{cite web}}: CS1 maint: multiple names: authors list (link)
  7. ↑ Baker, Stephanie (January 7, 2009). "Uma Thurman No Help to Arpad Busson in Madoff Fraud's Nightmare". Bloomberg L.P. Retrieved February 12, 2013.
  8. 1 2 "MassMutual Distances Itself from Madoff Hedge Fund Losses". The New York Times . April 20, 2009. Retrieved February 12, 2013.
  9. 1 2 "White v. Manzke". CA Court of Appeal. March 23, 2011. Retrieved February 13, 2013.
  10. ↑ "Tremont Group Holdings, Inc. Company Profile". Yahoo! Finance. 2013. Retrieved February 13, 2013.
  11. 1 2 3 4 "Tremont Group Holdings Announces Expanded Executive Role for Its President" (Press release). Rye, New York. PR Newswire. June 1, 2007. Retrieved February 13, 2013.
  12. ↑ "Tremont Group Holdings, Inc. | Company Profile". Hoover's. 2013. Retrieved February 13, 2013.
  13. 1 2 Herbst, Svea (January 28, 2009). "Tremont shuts down Rye, talk surfaces about future". Reuters . Retrieved February 12, 2013.
  14. 1 2 3 4 "Trustee in Madoff case sues insurer". Boston Globe . December 9, 2010. Retrieved February 12, 2013.
  15. 1 2 "T. Rowe Price chooses new international stock chief". Pensions & Investments. April 16, 2007. Retrieved February 12, 2013.
  16. ↑ Amon, Elizabeth (December 23, 2008). "Fairfield, Mol, Lehman, UBS, Madoff in Court News". Bloomberg L.P. Retrieved February 12, 2013.
  17. ↑ Vidya, Sree (January 29, 2009). "OppenheimerFunds Cuts 9% of Workforce as Assets Fall". Bloomberg L.P. Retrieved February 12, 2013.
  18. ↑ McCarty, Dawn (December 8, 2010). "Madoff Trustee Sues Former Tremont Capital CEO Manzke Over 'Stolen Money'". Bloomberg L.P. Retrieved February 12, 2013.
  19. ↑ Dan Wilchins, Kuganandhan Paramanandan, Carol Bishopric (June 27, 2008). "MOVES-Tremont, Sagent, Deutsche Bank, State Street". Reuters. Retrieved February 13, 2013.{{cite news}}: CS1 maint: multiple names: authors list (link)
  20. ↑ Lionel S. Lewis (2011). Con Game: Bernard Madoff and His Victims . Transaction Publishers. p.  43. ISBN   9781412846097 . Retrieved February 12, 2013. Tremont Group.
  21. ↑ O. C. Ferrell; John Fraedrich; Linda Ferrell (2009). Business Ethics 2009: Ethical Decision Making and Cases . Cengage Learning. p.  408. ISBN   9781439042816 . Retrieved February 12, 2013. Tremont Group.
  22. ↑ Ken Fisher; Lara W. Hoffmans (2010). How to Smell a Rat: The Five Signs of Financial Fraud. John Wiley & Sons. ISBN   9780470631966 . Retrieved February 12, 2013.
  23. ↑ Burton, Katherine (December 15, 2008). "Fairfield Sent Madoff $7.3 Billion as Funds Took Fees". Bloomberg L.P. Archived from the original on February 24, 2013. Retrieved February 12, 2013.
  24. 1 2 3 Emily Chasan; Andre Grenon (April 1, 2010). "KPMG wins dismissal of Madoff feeder fund lawsuit". Reuters. Retrieved February 13, 2013.
  25. 1 2 Bray, Chad (July 29, 2011). "Madoff Trustee Reaches $1 Billion Settlement With Feeder". The Wall Street Journal . Retrieved February 12, 2013.
  26. ↑ Sandler, Linda (September 22, 2011). "Judge Approves Madoff Trustee Settlement With Tremont Funds". Bloomberg Businessweek . Retrieved February 27, 2013.
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