A Bank of New York Mellon subsidiary has been charged with fraud for misleading clients about investments tied to Bernard Madoff.
The charge, brought by the New York attorney general's office, alleges Ivy Asset Management and two former senior officers failed to inform clients of suspicions they had about Madoff for fear of losing fee income, reports the Financial Times.
Although Ivy decided client money should not be invested with Madoff, it failed to disclose its concerns over the fraudster to clients who had already invested money with him.
The subsidiary raked in $40m in fees from clients between 1998 and 2008. According to the complaint, Ivy clients lost lost $227m as a result of the Madoff link.
Madoff was jailed for 150 years in March 2009 after confessing to running a multi-billion-dollar Ponzi scheme in what was the biggest investment scam in US financial history.
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