Authorities have reached a $210 million settlement with a BNY Mellon subsidiary, Ivy Asset Management, for advising clients to invest with Bernard L. Madoff, whose multibillion-dollar fraud landed him in federal prison, New York’s attorney general, Eric T. Schneiderman, said Tuesday.

The settlement of suits filed by the attorney general, the Labor Department and private plaintiffs also provides for about $9 million in payments by other defendants. Combined with anticipated future payments from Madoff bankruptcy proceedings, Mr. Schneiderman said the settlement was expected to return nearly all of the original investments to those who were defrauded, including union pension funds from upstate New York.

“Ivy Asset Management violated its fundamental responsibility as an investment adviser by putting its own pecuniary interests ahead of the interests of its clients,” Mr. Schneiderman said. “Ivy deliberately concealed negative facts it uncovered in its due diligence of Madoff in order to keep earning millions of dollars in fees. As a result, its clients suffered massive and avoidable losses.”

BNY Mellon did not immediately reply to requests for comment.

Between 1998 and 2008, authorities said, Ivy was paid more than $40 million to give advice and conduct due diligence for clients with large Madoff investments.

Michelle Hook, a spokeswoman for Mr. Schneiderman, said the losses included about $138 million by the 78 pension funds and most will be recovered.

Internal Ivy documents showed the firm had deep but undisclosed reservations about Mr. Madoff, authorities said. Its clients lost more than $236 million after Mr. Madoff’s Ponzi scheme collapsed.

In 2010, Andrew Cuomo, then the New York attorney general, filed a civil complaint, alleging fraudulent conduct by Ivy in connection with securities sales and breach of fiduciary duty, violations of the state’s Martin Act.

Ivy said then that its advisers raised questions about Mr. Madoff with clients and urged them to reduce their positions.

Authorities have said Mr. Madoff’s Ponzi scheme cost investors an estimated $17.3 billion.

Mr. Madoff pleaded guilty in 2009. He is serving a 150-year prison sentence in Butner, N.C.

Article source: http://www.nytimes.com/2012/11/14/business/bny-mellon-unit-settles-madoff-lawsuits.html?partner=rss&emc=rss