NEW YORK — Bernard Madoff has reached a partial settlement with the Securities and Exchange Commission, promising not to contest claims that his New York investment-advisory firm was a fraud, the agency said.
Accusations in the SEC’s Dec. 11 civil lawsuit are deemed “established and cannot be contested by Madoff” when financial sanctions are set, the agency said in describing the agreement on its website Monday. Madoff, 70, didn’t admit or deny wrongdoing under the accord, it said.
“His life is in the hands of the criminal authorities, and any funds that are identifiable are going to the victims,” Jacob Frenkel, a former SEC attorney now at Shulman Rogers Gandal Pordy & Ecker in Rockville, Md., said in an interview. “This is in many respects cosmetic.”
Madoff was sued Dec. 11 by the SEC, which asked a court to make him pay unspecified fines and forfeit profits after he allegedly admitted his investment-advisory firm was a $50 billion Ponzi scheme. In such frauds, existing investors are typically paid purported gains with money invested by newer participants.
The agreement announced Monday also extends an asset freeze and makes permanent a December order barring Madoff from future violations of laws against securities fraud, the SEC said.
U.S. District Judge Louis Stanton in New York, who is presiding over the SEC’s lawsuit, must approve the partial settlement and set a date to determine amounts for sanctions. That issue may be resolved after the completion of Madoff’s criminal case in Manhattan federal court.
Madoff is scheduled to appear in the criminal case Wed nesday for a hearing in which prosecutors must show why he was arrested in December. The appearance may be postponed or canceled if Madoff is formally indicted, said Ira Sorkin, his defense attorney, in an interview. Such hearings are rare, and Sorkin wouldn’t say whether he expects it to take place.
