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Company Law

Analysis - guidance - compliance

20 DEC 2013

MADOFF SECURITIES INTERNATIONAL LIMITED (IN LIQUIDATION) v STEPHEN RAVEN and OTHERS

Queen's Bench Division

Popplewell J

18 October 2013

(1) Introduction

The court considered whether or not the company's directors had breached a number of their fiduciary duties.     

[1]        On 29 June 2009, Bernard Madoff was sentenced by a Court of the Southern District of New York to 150 years in prison and ordered to forfeit US$170 billion.  The present claim is brought in the long shadow cast by his notorious Ponzi scheme fraud, perpetrated through his New York business for two decades or more.  But this case is not primarily about the Ponzi scheme.  None of the remaining Defendants knew of, or suspected, the fraud.  It is not suggested that they did, nor that they should have done.  Many lost their own savings as a result of the scheme.  All have had their lives turned upside down.  They are all victims of Bernard Madoff's fraud.

(1)     the payments constituted an unlawful distribution of capital to MSIL's shareholder, Bernard Madoff; and/or

(2)     the director was in breach of the duty to exercise powers for the purposes for which such powers are conferred; and/or

(3)     the director was in breach of the duty to act in the way he considers in good faith to be in the best interests of the company; and/or

(4)     the director was in breach of the duty to exercise reasonable care skill and diligence.

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