Auditing firm McGladrey & Pullen LLP reached a settlement on Monday with investors in a proposed class action targeting hedge funds that invested customer funds in Ponzi schemes run by Thomas J. Petters and Bernie Madoff.
According to a stipulation filed in San Francisco federal court, the proposed lead plaintiff in the case, Edgar W. Tuttle, lost his fight to lead a class against McGladrey & Pullen in an Oct. 28 ruling. After the ruling came down, Tuttle was left with only his individual claims against the auditing firm.
The two sides quickly reached an undisclosed settlement, with each party bearing its own costs.
McGladrey & Pullen is the first auditing firm to exit the litigation, which charges that hedge funds failed to fulfill their fiduciary duties to the funds’ limited partners, ultimately leading to the partners' incurring huge personal losses due to Madoff's and Petters' Ponzi schemes. Petters was convicted in 2009 of running a $3.7 billion Ponzi scheme and using the ill-gotten profits to buy Polaroid Corp. and other companies. He was sentenced to 50 years in prison in April and is currently incarcerated in a federal penitentiary in Leavenworth, Kan. Madoff, meanwhile, was sentenced to 150 years in prison in 2009 after being convicted of turning his wealth management business into a Ponzi scheme that defrauded investors of $65 billion. McGladrey & Pullen is represented by and Benedict Y. Hur, Christopher C. Kearny, and Cody S. Harris of Keker & Van Nest LLP as well as attorneys from Williams & Connolly LLP.
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Mr. Hur focuses on complex commercial disputes, white collar criminal and securities defense, and intellectual property litigation. He has tried numerous criminal and civil cases in state and federal courts, including more than half a dozen as first chair. He has represented executives and board members of publicly traded companies in federal courts and before the Securities and Exchange Commission. He has also defended both large and small corporations in commercial and intellectual property disputes in courts across the United States and before the International Trade Commission.
Joining Mr. Hur was Keker & Van Nest managing partner, Chris Kearney. Mr. Kearney uses proactive litigation strategies to protect large, publicly traded companies, and privately held organizations in complex trade secrets disputes, as well as accountants and lawyers in high-stakes professional liability matters. He has represented one of the largest U.S. based accounting firms in more than two dozen actions involving breach of contract, professional negligence and fraud claims throughout the Western United States. His experience at a Big Four accounting firm has given him a sharp understanding of financial and damage issues as they affect legal clients. He has also represented individuals and firms in matters before the Securities and Exchange Commission.