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A state judge has granted a motion to unseal documents and testimony in New York University's lawsuit against J. Ezra Merkin over investments made by his Ariel Fund Ltd. with disgraced financier Bernard Madoff.

In an order dated Tuesday and filed Wednesday, New York State Supreme Court Justice Richard Lowe III in Manhattan agreed to unseal some deposition testimony by Merkin and Victor Teicher.

In a court filing in February, NYU alleged that Merkin misled investors and failed to disclose in a 1993 prospectus that the Ariel Fund was being managed by Teicher, who had been convicted of insider trading. Teicher's lawyer has said Teicher wasn't actively managing the fund, but was acting more in an advisory role.

In his order, the judge said the testimony to be unsealed would include compensation information for Merkin, Teicher and other employees.

"Allowing disclosure of this information does not jeopardize the fund by revealing business strategy which would provide an advantage to competitors," the judge said. "Any minimal interest the defendants allege for maintaining the information under seal is outweighed by the public interest in such information."

NYU is suing Merkin, the former chairman of GMAC Financial Services, and his Gabriel Capital Corp. in state court over investments made through Ariel Fund with Madoff.

On March 12, Madoff was ordered directly to jail after he pleaded guilty to 11 criminal counts in connection with a decades-long Ponzi scheme that bilked thousands of investors out of billions of dollars.

Madoff, 70 years old, is expected to be sentenced in June and faces what could amount to be a life sentence.

Earlier this month, New York Attorney General Andrew Cuomo filed a civil fraud suit against Merkin, alleging he funneled $2.4 billion in investor funds to Madoff without his clients' knowledge.

In his order, Justice Lowe also agreed to unseal information regarding the names of fund employees, subadvisors, managing members and any fees received.

He agreed to keep sealed information about the names of investors in the fund and the investment strategy contemplated for those investors.

The judge agreed to unseal Merkin's deposition testimony regarding steps taken by regulatory agencies with respect to the Madoff probe - namely that Merkin gave testimony to regulators and the circumstances of that testimony.

"There is no substantive discussion of the information given during the depositions taken by regulatory agencies which would jeopardize the investigation or any particular interest of the defendants," the judge said.

-By Chad Bray, Dow Jones Newswires, 212-227-2017; chad.bray@dowjones.com