NY Judge Agrees To Unseal Some Documents In NYU Suit Vs Merkin
16 April 2009 - 6:15AM
Dow Jones News
A state judge has granted a motion to unseal documents and
testimony in New York University's lawsuit against J. Ezra Merkin
over investments made by his Ariel Fund Ltd. with disgraced
financier Bernard Madoff.
In an order dated Tuesday and filed Wednesday, New York State
Supreme Court Justice Richard Lowe III in Manhattan agreed to
unseal some deposition testimony by Merkin and Victor Teicher.
In a court filing in February, NYU alleged that Merkin misled
investors and failed to disclose in a 1993 prospectus that the
Ariel Fund was being managed by Teicher, who had been convicted of
insider trading. Teicher's lawyer has said Teicher wasn't actively
managing the fund, but was acting more in an advisory role.
In his order, the judge said the testimony to be unsealed would
include compensation information for Merkin, Teicher and other
employees.
"Allowing disclosure of this information does not jeopardize the
fund by revealing business strategy which would provide an
advantage to competitors," the judge said. "Any minimal interest
the defendants allege for maintaining the information under seal is
outweighed by the public interest in such information."
NYU is suing Merkin, the former chairman of GMAC Financial
Services, and his Gabriel Capital Corp. in state court over
investments made through Ariel Fund with Madoff.
On March 12, Madoff was ordered directly to jail after he
pleaded guilty to 11 criminal counts in connection with a
decades-long Ponzi scheme that bilked thousands of investors out of
billions of dollars.
Madoff, 70 years old, is expected to be sentenced in June and
faces what could amount to be a life sentence.
Earlier this month, New York Attorney General Andrew Cuomo filed
a civil fraud suit against Merkin, alleging he funneled $2.4
billion in investor funds to Madoff without his clients'
knowledge.
In his order, Justice Lowe also agreed to unseal information
regarding the names of fund employees, subadvisors, managing
members and any fees received.
He agreed to keep sealed information about the names of
investors in the fund and the investment strategy contemplated for
those investors.
The judge agreed to unseal Merkin's deposition testimony
regarding steps taken by regulatory agencies with respect to the
Madoff probe - namely that Merkin gave testimony to regulators and
the circumstances of that testimony.
"There is no substantive discussion of the information given
during the depositions taken by regulatory agencies which would
jeopardize the investigation or any particular interest of the
defendants," the judge said.
-By Chad Bray, Dow Jones Newswires, 212-227-2017;
chad.bray@dowjones.com