Madoff’s Firm Sold to Castor Pollux, Lawyer Says

By David Glovin, Linda Sandler and Christopher Scinta

March 27 (Bloomberg) -- The trustee liquidating Bernard L. Madoff Investment Securities LLC reached a deal to sell the company’s market-making business, an attorney said.

David Sheehan, a lawyer for Irving Picard, who was appointed by the Securities Investor Protection Corp. to unwind Madoff’s businesses, said today in an interview that a press release will be issued announcing the sale to an entity called Castor Pollux.

The sale is subject to higher offers in a U.S. bankruptcy court-supervised auction, Sheehan said. He declined to state the sale price. About 35 remaining employees of the unit were fired today as part of the planned sale, Sheehan said.

SIPC has a member firm called Castor Pollux Securities LLC, based in Medfield, Massachusetts. Darin Oliver, the president, couldn’t be reached by phone or e-mail for comment. Sheehan said Castor Pollux no longer required the trustee to retain the existing employees, with whom Castor Pollux may enter a “separate relationship.”

Picard has tracked about $75 million in Madoff assets to Gibraltar, raising to $1 billion the amount the trustee has recovered for investors, Sheehan said this week. A federal judge gave Picard power of attorney over Madoff’s London business in a March 23 order.

The U.K. unit, Madoff International, was owned almost exclusively by Madoff himself and served as his proprietary trading unit, Picard said in a Feb. 19 filing with a London court. Still, New York-based Madoff Securities and Madoff International “may well be inextricably intermingled,” he said.

Brokerage’s Earnings

The Madoff brokerage had earnings of just $1.12 million last year from its market-making and proprietary trading businesses, according to documents drawn up by the investment bank Lazard Ltd. Barry Ridings, vice chairman of U.S. investment banking at Lazard, which was handling the sale, couldn’t be reached by phone or e-mail for comment.

“The brand has no value because no one in his right mind would want to open a brokerage named Madoff,” Larry Tabb, founder of TAB Group, a financial-market research and advisory firm, said this month.

“You’re buying trading desks, computers, back office software and routing systems -- and every day the business isn’t sold, the value goes down and down.”

Madoff pleaded guilty March 12 to defrauding investors by using money from new ones to pay off old ones in a Ponzi scheme. Before his Dec. 11 arrest, Madoff had told his thousands of clients that they had about $65 billion, prosecutors said. Prosecutors and investigators including Picard, a lawyer with Baker Hostetler LLP in New York, are now seeking to recover assets for victims.

The bankruptcy case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporters on this story: David Glovin in federal court in Manhattan at dglovin@bloomberg.net; Linda Sandler in New York at lsandler@bloomberg.net; Christopher Scinta in federal court in Manhattan at cscinta@bloomberg.net.