Legal
French Wealth Manager Sues UBS Over Madoff Funds

French wealth manager KBL Richelieu Private Banking and insurer La Mondiale are suing a UBS unit and a fund linked to alleged fraudster Bernard Madoff to recover the $4.1 million they had invested in his funds, according to a Bloomberg report.
The report said the French investors' lawyers petitioned a Luxembourg court for an order of payment against the LuxAlpha American Selection fund and its custodian UBS. The firms’ representatives said that they had made a redemption request to the fund on 14 November, nearly a month before Mr Madoff 's arrest on 11 December.
KBL, which held the shares for La Mondiale, said it had received confirmation that the LuxAlpha shares were sold on 10 December and that payment was due five days later.
Lawyers for the defence argued that clarification from Luxembourg’s financial regulator was needed before disbursements to investors could proceed.
In January, French asset manager Oddo & Cie received €30 million ($39.3 million) in court-ordered compensation from UBS, which had acted as the custodian bank of the LuxAlpha American Selection Fund.
Oddo sold clients’ shares in the fund in November, but never received the proceeds from the sale. UBS then argued it could not pay out any money after Mr Madoff’s arrest, because all investors had to be treated equally.
A court in Luxembourg then said UBS’s reasoning was “manifestly unjustifiable” and ordered the bank pay Oddo €30 million on 16 January, with a €3 million fine for every day it delayed. The bank complied on the date appointed.
At KBL’s hearing, Francois Kremer, whose law firm Arendt & Medernach represents UBS, was reported to have said: “There are some €38 million in LuxAlpha’s account with us and if we have to repay the investors here now, then at some point there’s nothing left for all the others.”