HSBC To Pay Over $60M To Settle Madoff-Related Lawsuit

Jun 7 2011 | 12:45pm ET

Some of the investors burned in Bernard Madoff’s Ponzi scheme have scored a $62.5 million settlement in a lawsuit against HSBC Holdings, which acted as his custodian.

The class-action suit was filed against several HSBC units and other defendants by investors in Ireland’s Thema International Fund. The fund’s assets had been invested with Bernard L. Madoff Securities.

In a statement quoted by Bloomberg, HSBC said the settlement “shall in no way be construed” as an admission of fault, adding that it had “good defenses” against Madoff-related suits it faces in Germany, Luxembourg and other countries.

According to a statement by the fund’s law firm, Chapin Fitzgerald Sullivan & Bottini, the Thema Fund was controlled by Bank Medici. Bank Medici and its founder, Sonja Kohn, are part of a $59 billion suit filed by the court-appointed trustee liquidating Madoff’s firm.

The bank has stated it knew nothing of Madoff’s fraud and lost $1 billion itself in Madoff feeder funds. But according to KPMG reports obtained by Bloomberg, auditors twice warned HSBC that investing client funds (as much as $8 billion) with Madoff left it open to “fraud and operational risks.”

The deal still needs court approval.


In Depth

Q&A: George Schultze On His Fund's Unique Approach to Distressed Investing

Apr 16 2015 | 1:01am ET

George Schultze is a managing member of Schultze Asset Management, a long/short...

Lifestyle

Puerto Rico Woos The Rich But So Far Gains Little

Apr 17 2015 | 2:45am ET

Hedge fund manager Rob Rill grins. He has just had word that U.S. financial regulators...

Guest Contributor

Minnesota Supreme Court Rejects The Ponzi Scheme Presumption: Lenders Claw Back Some Of Their Own Rights

Apr 17 2015 | 9:23am ET

A recent court ruling in Minnesota has put an end to the Ponzi Scheme Presumption...

 

Editor's Note