The suit by MLSMK Investments Co., a Palm Beach, Florida- based partnership, claims the New York-based bank learned of the fraud in September 2008 after investigating why funds that invested with Madoff hadn’t suffered steep losses in the global sell-off.

The bank “quietly liquidated its entire $250 million cash position” with a fund that had invested with Madoff while continuing to provide fee-generating services to Madoff’s business, according to the complaint.

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