BOSTON Jan 28 Tremont Group Holdings Inc said
it shut its Rye Investment Management unit and laid off
employees after investing heavily with suspected swindler
Bernard Madoff, raising questions about its future.
The Rye unit lost roughly $3 billion, virtually all of its
assets to Madoff, who allegedly confessed to his sons last
month the firm's investment advisory business was "one big lie"
and estimated the losses at $50 billion.
"Tremont has restructured its business to reflect market
conditions and the reduced amount of assets under management,"
Tremont spokesman Montieth Illingworth said on Wednesday.
He declined to say exactly how many people were laid off at
the Tremont family of funds, but said the cuts were a
"significant reduction." He also did not say how many people
worked at the privately held company based in Rye, New York.
The job cuts raised questions about what Massachusetts
Mutual Life Insurance Co will do with its Tremont unit, which
also faces at least two law suits related to the scandal
surrounding Madoff. Madoff had a close business relationship
with former Tremont executives Sandra Manzke and Robert
A MassMutual official declined to comment.
The company's Tremont Capital Management unit, which has
long selected hedge funds for wealthy investors, is still in
business. At the end of 2008, it invested $2.7 billion, but
industry experts expect the number to be much lower now
considering the unit suffered a one-two punch late last year.
Not only was the unit hurt by the firm's strong ties to
Madoff, but also when investors turned their backs on hedge
funds of funds in general, hedge fund managers and investors
Talk has surfaced that MassMutual, whose OppenheimerFunds
Inc unit paid $140 million for Tremont in 2001, may want to
sell it. But some question whether there would be buyers.
"I suspect they are probably dead in the water," said one
hedge fund investor who is familiar with the firm, but is not
authorized to speak about it publicly.
"They would have so much trouble raising assets that I
suspect their parent will have little choice, but to write down
the investment," the person added.
(Reporting by Svea Herbst-Bayliss; Editing by Andre Grenon)