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Peter Vermeulen, editor of www.inveztor.nl, brought to Opalesque some hot news straight from the Dutch financial arena.

It starts with Cadogan Management, a New York-based investment manager specializing in multi-manager hedge funds, which manages the Cadogan Market Neutral Fund.

The fund was issued in the Netherlands by Fortis Investment Management and by MeesPierson, an exclusive Rotterdam-headquartered private bank that used to be known as Fortis MeesPierson until earlier this year.

It became apparent to the Dutch press that the Cadogan fund had invested around 10% of its AuM in the Rye Select Broad Market Fund, L.P. either in 2006 or in 2007.

The Rye Select fund, which is managed by Rye Management (which is itself part of Tremont Group Holdings), invested most of its AuM ($3bn) in Madoff Securities. This investment has been reportedly wiped out since Madoff’s arrest.

According to Dutch reporters, who obtained a letter to investors sent in mid-February by MeesPierson, and who wrote about it in 'Het Financieele Dagblad' first, Cadogan’s investment in Rye was side-pocketed. And the managers at Cadogan are not letting investors redeem from this side-pocket until they know if there will be a claim on profits incurred on selling the Rye Fund in the past.

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