August 14, 2009 / 8:50 PM / 10 years ago

Madoff feeder Tremont to auction fund assets: report

NEW YORK (Reuters) - Tremont Group Holdings, which lost more than $3 billion investing clients money with Ponzi mastermind Bernard Madoff, is set to auction most of its remaining hedge fund assets in the coming weeks, the Wall Street Journal reported Friday.

Portfolios recently valued at $420 million, including some hedge fund holdings, will be sold off through an auction managed by investment bank Duff & Phelps, the paper said.

Tremont wants to return as much money as possible to clients in its fund-of-hedge funds business. This unit had a small portion of its client money invested with Madoff, but news of the scandal and Tremont’s exposure last December sparked an exodus by investors.

Tremont and Duff & Phelps declined to comment.

Tremont has satisfied many redemption requests, though some assets were locked up in hedge funds that would not allow withdrawals, the paper reported. These are the stakes that will now be auctioned off through the secondary market.

As of the second quarter, Tremont holdings included investments with Cerberus Capital Management, GoldenTree Asset Management, Perry Partners and Canyon Capital Advisors, among others.

Tremont is a unit of customer-owned Massachusetts Mutual Life Insurance Co.

Tremont Group had invested more than half of its assets with Madoff’s firm, primarily through feeder funds that in turn invested solely with the fraudster.

The fund-of-funds unit, Tremont Capital Management, had $200 million out of a total $3 billion in assets before the Madoff fraud was exposed.

Reporting by Joseph A. Giannone; Editing by Bernard Orr

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