Hedge Funds Bet Madoff Investors Will Collect More than 20 to 34 Cents on the Dollar
Hedge funds are contacting defrauded investors with Bernard Madoff and offering to buy their claims in the Ponzi schemer’s bankruptcy.
The hedge funds are offering to pay investors for the right to collect the full settlement after the bankruptcy trustee resolves lawsuits filed against deep-pocket defendants, according to the DealBook blog of the New York Times. The funds are betting that the eventual payout will be much higher than the amount paid to buy the claim.
One Madoff investor said he had gotten letters from six companies offering to pay amounts ranging from 20 cents to 34.5 cents on the dollar. A defrauded family recently sold a claim of $50 million to a large hedge fund for about 30 cents on the dollar, a source told the blog.
The suits filed by trustee Irving Picard “are catnip for an obscure breed of Wall Street traders speculating on the outcome of the enormous Madoff bankruptcy case,” DealBook says.
