HSBC Settles First Suit Over Madoff Feeder Fund

Nov 13 2012 | 11:27am ET

The legal mess resulting from the collapse of Bernard Madoff's Ponzi scheme remains daunting—as HSBC Holdings can attest.

The bank has settled the first of more than 50 lawsuits filed against it in Ireland. HSBC and Kalix Fund struck an "amicable settlement" over the latter's allegations that HSBC failed, as custodian to a UCITS-compliant Madoff feeder fund, to protect the money entrusted to it.

The UCITS fund in question, Thema International Fund, has sued HSBC itself, seeking the roughly €1 billion it lost when Madoff was arrested.

Kalix's lawsuit was the first to reach trial, which was supposed to last six weeks but which only went a day before the settlement. The fund was seeking US$35.6 million; terms of the deal were not disclosed.

Kalix had accused HSBC of knowing the risks that Madoff posed, but all but ceding its custodial duties to the fraudster. It then allegedly tried to hide those facts.

HSBC said its accord with Kalix is "subject to obtaining any necessary approvals."


In Depth

Fund Focus: Asian Frontier Capital Offers U.S. Investors Access To Untapped Markets

Mar 2 2015 | 6:47am ET

Hong-Kong based asset manager Asian Frontier Capital is making a capital raising...

Lifestyle

Hedge Fund Manager Out as Minnesota Wild Minority Owner

Feb 25 2015 | 2:45pm ET

New York hedge fund manager Philip Falcone is no longer a minority owner of the...

Guest Contributor

Risk Management: The Due Diligence Challenge And Branding Opportunity

Mar 2 2015 | 8:41am ET

The hedge fund firms that make it easier for prospective investors to gain comfort...

 

Editor's Note