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Tremont Group Holdings, Inc., a Delaware corporation headquartered in
Rye, New York Rye is a city in Westchester County, New York, United States, within the New York metropolitan area, New York City metropolitan area. It received its charter as a city in 1942, making it the most recent such charter in the state. Its area of ...
, is a
hedge fund A hedge fund is a Pooling (resource management), pooled investment fund that holds Market liquidity, liquid assets and that makes use of complex trader (finance), trading and risk management techniques to aim to improve investment performance and ...
group with a subsidiary that advised a feeder fund to
Bernard Madoff Bernard Lawrence Madoff ( ; April 29, 1938April 14, 2021) was an American financial criminal and financier who was the admitted mastermind of the largest known Ponzi scheme in history, worth an estimated $65 billion. He was at one time ...
's investment advisory firm in the
Madoff investment scandal The Madoff investment scandal was a major case of stock and securities fraud discovered in late 2008. In December of that year, Bernie Madoff, the former Nasdaq chairman and founder of the Wall Street firm Bernard L. Madoff Investment Securities ...
. This was the second-largest feeder fund to Madoff's firm due to the group having had a long professional relationship with him as Chairman of the NASD, the precursor to
FINRA The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that financial regulation, regulates member brokerage firms and exchange (organized market), exchange markets. ...
, and as the largest options market maker on the
NASDAQ The Nasdaq Stock Market (; National Association of Securities Dealers Automated Quotations) is an American stock exchange based in New York City. It is the most active stock trading venue in the U.S. by volume, and ranked second on the list ...
.The firm was one of the largest hedge fund consultants and advisors globally during the seminal 1990's period and pioneered a number of ground breaking products such as the CSFB Tremont Hedge Fund Index, specialized products and venues for hedge fund investment; structured products, insurance entities, new markets and jurisdictions including the first institutional fund of hedge funds in Korea and the foundation of The Bermuda Stock exchange. Prominent board members and shareholders included; Mario Gabelli of Gabelli Asset Management, Leon Cooperman of Omega Advisors and Arthur Samberg of Pequot Capital Management. Tremont was among the first investors and/or involved in the launch or restructuring of numerous legendary funds such as; S.A.C.,
Quantum In physics, a quantum (: quanta) is the minimum amount of any physical entity (physical property) involved in an interaction. The fundamental notion that a property can be "quantized" is referred to as "the hypothesis of quantization". This me ...
and AQR.


History

Tremont Group was founded in 1985 by
money manager Investment management (sometimes referred to more generally as financial asset management) is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified inve ...
Sandra Manzke, who was its chief executive officer from May 1994 to August 2000, and co-CEO until 2005. It owns Tremont Partners and Tremont Capital Management (formerly Tremont Advisers), a consultant, advisor and hedge
fund of funds A "fund of funds" (FOF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. This type of investing is often referred to as multi-manager investment. A f ...
. Tremont Holdings also has offices in London, Toronto, and Hong Kong. Its subsidiaries are regulated by the U.S.'s
Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...
and
National Association of Securities Dealers The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Associati ...
, the U.K.'s
Financial Services Authority The Financial Services Authority (FSA) was a quasi-judicial body accountable for the regulation of the financial services industry in the United Kingdom between 2001 and 2013. It was founded as the Securities and Investments Board (SIB) in 1985 ...
, the
Ontario Securities Commission The Ontario Securities Commission (OSC; French language, French: ''Commission des valeurs mobilières de l’Ontario'') is a regulation, regulatory agency which administers and enforces security (finance), securities legislation in the Canadian p ...
, and the Hong Kong Securities and Futures Commission.The firm previously partly owned Tremont International Insurance and Tremont Bermuda Ltd. Tremont Group invested with Madoff starting in 1997 via its Rye Investment Management division, headquartered in
Rye, New York Rye is a city in Westchester County, New York, United States, within the New York metropolitan area, New York City metropolitan area. It received its charter as a city in 1942, making it the most recent such charter in the state. Its area of ...
. Tremont Group closed the Rye Investment Management division in January 2009.
Massachusetts Mutual Life Insurance Company The Massachusetts Mutual Life Insurance Company, also known as MassMutual, is a Springfield, Massachusetts-based life insurance company. MassMutual provides financial products such as life insurance, Disability insurance, disability income ins ...
's Oppenheimer Funds Inc. unit paid $140 million to purchase Tremont from Manzke in 2001. Manzke left Tremont in 2005. In January 2006, Rupert A. Allan became President of Tremont Group. In June 2007, he was also named CEO of Tremont Group, replacing Schulman, who remained chairman of Tremont Group until his retirement in July 2008.


Madoff scheme fallout

The hedge fund lost $3.3 billion, representing more than half its assets, in the
Madoff investment scandal The Madoff investment scandal was a major case of stock and securities fraud discovered in late 2008. In December of that year, Bernie Madoff, the former Nasdaq chairman and founder of the Wall Street firm Bernard L. Madoff Investment Securities ...
. When the scheme was uncovered in December 2008, Brad Alford, who runs Alpha Capital Management LLC, which helps clients choose hedge funds, said:
It's mind-boggling that people like Tremont ... had been doing this for so long. It's the job of these funds of funds to be doing due diligence. That's why they get paid.


Madoff scheme litigation

In April 2010, Judge
Thomas Griesa Thomas Poole Griesa (October 11, 1930 – December 24, 2017) was a United States federal judge, United States district judge of the United States District Court for the Southern District of New York from 1972 to 2017 and its Chief Judge from 1993 ...
, of the
U.S. District Court for the Southern District of New York The United States District Court for the Southern District of New York (in case citations, S.D.N.Y.) is a federal trial court whose geographic jurisdiction encompasses eight counties of the State of New York. Two of these are in New York City ...
dismissed a lawsuit by Tremont Group investors against Tremont's
auditor An auditor is a person or a firm appointed by a company to execute an audit.Practical Auditing, Kul Narsingh Shrestha, 2012, Nabin Prakashan, Nepal To act as an auditor, a person should be certified by the regulatory authority of accounting an ...
,
KPMG KPMG is a multinational professional services network, based in London, United Kingdom. As one of the Big Four accounting firms, along with Ernst & Young (EY), Deloitte, and PwC. KPMG is a network of firms in 145 countries with 275,288 emplo ...
, which charged that KPMG had failed to discover the fraud in its audits of Tremont and was therefore liable to the investor. Judge Griesa held that KPMG could not be sued, because there was no intent to deceive. He wrote: "Merely alleging that the auditor had access to the information by which it could have discovered the fraud is not sufficient." In December 2010,
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, the court-appointed trustee in the Madoff bankruptcy, sued Tremont for over $3 billion in customer money that Tremont lost by investing with Madoff. The lawsuit alleged that Tremont failed to perform independent, reasonable, and meaningful due diligence of Madoff. In July 2011, Tremont Group agreed to settle the lawsuit by paying a $1 billion cash settlement.


See also

* List of investors in Bernard L. Madoff Securities


References

{{Reflist , 2


External links


Group Homepage
Madoff investment scandal Rye, New York Hedge fund firms in New York City Companies based in Westchester County, New York Companies established in 1985 Privately held companies based in New York (state) 1985 establishments in New York (state)