A U.S. judge is urging the British courts to force HSBC to hand over a series of reports with the explosive title, “HSBC Bank plc Review of fraud and related operation risks at Bernard L. Madoff Investment Securities,” written in the years prior to Madoff’s arrest in December 2008.
U.S. Bankruptcy Judge Burton Lifland agreed to ask the London High Court to order HSBC to hand over the reports, as well as contracts, audio recordings and other documents related to the risk reviews conducted by KPMG International on behalf of the bank. The records are being sought by court-appointed receiver Irving Picard, who has already reached a deal with HSBC on what will be turned over if the British court acts.
The KPMG reports date from 2006 until 2008, and the other documents include a July 17, 2008, recording of a KPMG presentation on the risks at Madoff’s firm, five months before the $65 billion Ponzi scheme collapsed. The last review came in September, about three months before Madoff’s arrest.
HSBC served as the custodian of several Madoff feeder funds, and has been sued by those feeder funds, as well as their investors, following the revelation of the Madoff fraud. Picard is also suing HSBC and one of the feeder funds, Herald Fund, for $578 million. Herald is also suing HSBC.
HSBC has since dissolved its Luxembourg-based custodian following its heavy losses in the Madoff case.