WMD, along with the broader defense group, obtained a victory in the United States Court of Appeals for the Second Circuit for its clients Fairfield Investment Fund Ltd., Fairfield GCI Fund, and FIF Advanced, Ltd. (the “Fairfield Defendants”). The Second Circuit reversed, in part, a series of decisions in the United States Bankruptcy Court for the Southern District of New York and determined that all claims brought against the Fairfield Defendants should be dismissed.

In 2008, Bernie Madoff was revealed to be running one of the largest Ponzi schemes in history through his company Bernard L. Madoff Investment Securities (“BLMIS”). Shortly after Madoff’s arrest, feeder funds Fairfield Sentry Ltd., Fairfield Sigma Ltd., and Fairfield Lambda Ltd. (the “Funds”) were placed into liquidation in the British Virgin Islands. The appointed Liquidators commenced approximately 300 separate actions in the United States to recover payments redeemed from BLMIS through the Funds prior to the collapse of the Ponzi scheme. In total, the Liquidators sought to claw back over $6 billion in redemption payments from the Funds’ investors. After more than 15 years of litigation, all claims except one, a claim for constructive trust under BVI common law, were dismissed by the lower courts. When the United States District Court for the Southern District of New York affirmed the Bankruptcy Court’s decision permitting the constructive trust claim to proceed in August of 2022, the Fairfield Defendants and the other remaining defendants appealed to the Second Circuit. Simultaneously, the Liquidators filed appeals challenging the lower courts’ dismissal of their other BVI statutory and common law claims.

On August 5, 2025, the Second Circuit awarded the Fairfield Defendants and other defendants a total victory against the Liquidators. The Second Circuit affirmed the lower courts’ dismissal of the BVI statutory and common law claims on the grounds that the safe harbor for securities transactions found in the United States Bankruptcy Code, 11 U.S.C. § 546(e), barred recovery. The Court determined that the safe harbor applied extraterritorially (i.e. to conduct occurring outside of the United States), and thus precluded all of the Liquidators’ claims.

The Second Circuit appeals are docketed at In re Fairfield Sentry Ltd., Case Nos. 22-2101-bk(L), 23-965(L) (2d Cir.). The Fairfield Defendants’ Bankruptcy Court proceedings include Fairfield Sentry Limited, et al. v. ABN AMRO Schweiz AG et al., Adv. Pro. No. 10-03636 (Bankr. S.D.N.Y.).