Two Hedge Funds, HSBC Sued Over Madoff Withdrawals

Jul 16 2009 | 9:07am ET

HSBC Holdings has been named in a pair of lawsuits filed against hedge funds as part of the liquidation of Ponzi scheme mastermind Bernard Madoff’s empire.

On Tuesday, Irving Picard, the court-appointed trustee overseeing the Madoff case, sued the Herald Fund, seeking the $587 million it withdrew from its Madoff accounts in the three months before Madoff’s arrest in December. Yesterday, he filed a similar suit against the Primeo Fund, seeking $150 million. In both lawsuits, HSBC was also named as a defendant.

Picard alleges in both suits the Herald and Primeo, both based in the Cayman Islands, “knew or should have known that Madoff’s investment advisory business was predicated on fraud.” Madoff pleaded guilty to running a $65 billion Ponzi scheme in March, and last month was sentenced to 150 years in prison.

Both Herald and Primeo invested with Madoff through HSBC, which said in a statement issued after the Herald lawsuit was filed that it “continues to believe that it has good defenses to the claims and will vigorously defend itself against the actions that have been brought.”

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