Jed Rakoff, US district judge, has upheld an award by the Financial Industry Regulatory Authority (FINRA) made earlier in the year which could provide the unsecured creditors of Bayou with the sum.
Although the award could still be contested by Goldman Sachs, it is thought to be the largest ever claim made against an investment bank.
Goldman Sachs has been accused of ignoring signs of fraud at the hedge fund by the Bayou creditors.
In a filing Judge Rakoff said: âAfter full consideration of the partiesâ briefs and oral argument, the court hereby denies the petition to vacate the arbitration award and grants the cross-petition to confirm the award.â
Ross Intelisano, a partner at New York law firm Rich & Intelisano, a representative for Bayou, said: âWe are looking forward to investors finally getting some of their money back from this tragic fraud.â
Bayou went out of business during 2005 and Samuel Israel III, the firmâs former chief executive officer, is now serving 20 years for fraud.
By Jim Ottewill