Deal closed for ex-Madoff trading unit

By Grant McCool

NEW YORK (Reuters) - The sale of Bernard Madoff's former securities-trading unit for $25.5 million has been finalized, the new broker-dealer taking it over said on Thursday, as officials continue to investigate the confessed swindler's massive global fraud.

New York-based Surge Trading Inc said in a statement it will operate on the same floor of the so-called Lipstick Building in Manhattan where the brokerage arm of Bernard L. Madoff Investment Securities LLC (BLMIS) ran its trading platform.

Surge was formerly known as Castor Pollux Securities Inc, the Boston firm that won the auction in April for the Madoff unit, which sold for a fraction of its former worth of about $1 billion. Officials said the unit was legitimate, unlike the investment arm at the center of the $65 billion fraud.

"Surge Trading has also hired key personnel from the former BLMIS who supported that firm's successful market-making and proprietary trading businesses," the statement said.

Madoff, 71, pleaded guilty in March to orchestrating the fraudulent scheme over 20 years through the investment unit of the firm. Madoff, a former non-executive chairman of the Nasdaq stock market, was immediately jailed and is expected to spend the rest of his life in prison after sentencing on June 29.

The start of market-making operations by the new firm is subject to approval by the Financial Industry Regulatory Authority, or FINRA.

Executives of the former Madoff trading unit, which matched buyers and sellers of stocks, included Madoff's brother Peter and two of the swindler's sons, Mark and Andrew. They have denied knowledge of the fraud and have not been charged with any crime, although their assets have been frozen.

Stephen Sussman, a managing member of Regulatory Compliance LLC, a firm that worked on the deal's details, said it involved hundreds of hours examining records and filing documents with authorities, but he never met the Madoffs.