Tue, Dec 07, 2010 - Page 10 News List

HSBC sued over fraud claims by Madoff trustee

‘ACCOMPLICE’:The suit alleges the bank knew that Madoff’s investment business was fraudulent, and that it failed to take steps to protect investors

Bloomberg

HSBC Holdings PLC, Europe’s biggest lender, was sued for US$9 billion over claims it aided Bernard Madoff’s fraud through a network of feeder funds in Europe, the Caribbean and Central America.

Irving Picard, trustee for the liquidation of Bernard L. Madoff Investment Securities LLC, sued HSBC and a dozen feeder funds in the US Bankruptcy Court in Manhattan, Picard said in a statement.

The claim is the latest by Picard, who faces a Thursday deadline for suits claiming money from parties alleged to have profited from Madoff’s fraud.

The suit alleges the bank was aware of concerns that Madoff’s investment business was fraudulent and didn’t take steps to protect investors, according to the statement.

“Had HSBC and the defendants reacted appropriately to such warnings and other obvious badges of fraud outlined in the complaint, the Madoff Ponzi scheme would have collapsed years, billions of dollars and countless victims sooner,” Picard said in the statement.

A call placed to HSBC North America spokeswoman Lisa Sodeika outside office hours wasn’t immediately returned.

The suit against HSBC and the feeder funds is the biggest filed by Picard in the case.

Picard filed a US$7.2 billion claim against investor Jeffry Picower in May last year. Picower died later that year. Last week, Picard sued JPMorgan Chase & Co for US$6.4 billion over claims the bank aided and abetted Madoff’s fraud.

On Nov. 23, Picard sued UBS AG for at least US$2 billion, claiming the Swiss wealth-management firm also helped Madoff in his fraud. UBS and JPMorgan Chase said they bear no responsibility for Madoff’s crimes.

Picard has filed other claims seeking the return of US$15.5 billion paid to Madoff friends and family, feeder funds and some investors. In addition, he’s sued hundreds of so-called “net-winner” investors — those who withdrew more money from their Madoff accounts than they invested.

Picard, who has recovered US$1.5 billion for Madoff creditors, has said that any money received in judgments or settlements in the suits will be returned to creditors on a pro rata basis.

Madoff, 72, is serving a 150-year sentence in a North Carolina federal prison after admitting he directed the biggest Ponzi scheme in history.

At the time of his arrest, Madoff’s account statements reflected 4,900 accounts with US$65 billion in nonexistent balances. Investors lost about US$20 billion in principal.

This story has been viewed 1901 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top