Madoff Trustee Barred From Suing Big Banks

On behalf of Macdonald Fernandez LLP on Friday, June 21, 2013.

The US Court of Appeals for the Second Circuit has upheld a lower court ruling barring Irving Picard, the trustee supervising the dissolution of Bernard Madoff's Ponzi scheme in bankruptcy, from recovering almost $30 million from JP Morgan Chase and other banks he alleges aided Madoff's fraud. The court sustained the banks' in pari delicto defense (Latin for "in equal fault"), holding that Picard stands in Madoff's shoes and two wrongdoers cannot sue each other for damages related to their conduct. The court also commented that the victims may sue the banks, but there may be financial and procedural hurdles.