The ruling by Judge Deborah Batts was made public Monday. It says investors in the hedge funds run by J. Ezra Merkin were sufficiently warned about risks.
The Manhattan jurist says a few people were suspicious about Madoff's practices before the allegations were publicly revealed. But she says it wasn't widely known - and he even duped government regulators.
The 73-year-old Madoff is serving a 150-year prison term after admitting the fraud.