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Madoff Trading Unit Buyer Sees Accounting Problems

April 1, 2010

It shouldn’t come as a surprise that the securities firm that agreed to buy the trading unit at Bernie Madoff’s old investment firm is quickly running into accounting headaches.

Surge Trading, formerly known as Castor Pollux Securities, had originally agreed to pay $1 million to the court-appointed trustee overseeing the liquidation of Bernard L. Madoff Investment Securities at the close of the sale, and up to $24.5 million by December 2013, according to Reuters. However, it’s now asking the trustee, Irving Picard, to amend the agreement because Surge’s auditor has declined to certify its financials for fiscal 2009. The auditor is apparently concerned that the deferred payout would leave it out of compliance with Financial Industry Regulatory Authority rules.

It’s little wonder that the auditor is skeptical. Madoff may have claimed his proprietary trading operations were not part of the $65 billion Ponzi scheme, but as more details have emerged about his firm and its operations, a promise to pay $24.5 million out of Madoff’s former business would make anybody wonder how much money is really going to be made there.

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