The trustee acting for victims of Ponzi fraudster Bernard Madoff said yesterday he has struck an agreement with Union Bancaire Privee, and a related Caymans entity, M-Invest Ltd, involving a payment to his clients of up at least $470 million, and possibly $500 million in total.

The trustee is Irving Picard, a partner with Baker & Hostetler and the SIPA Trustee for the liquidation of Bernard L Madoff Investment Securities. The settlement involves at least $470 million in cash and could reach $500 million depending on the outcome of other related actions, according to a statement.

Picard has already brought claims against HSBC, JP Morgan and UBS for their alleged roles in funnelling client funds to Madoff, whose $65 billion scam was the biggest crime to have emerged during the financial crisis. In March last year, Madoff was jailed by a US court for 150 years after pleading guilty to his crimes. The affairs has prompted soul-searching in the wealth management industry about the need for more due diligence checks on investments.

The statement said a motion for approval of the settlement was filed with the United States Bankruptcy Court for the Southern District of New York.  The court will hold a hearing for approval of the settlement motion on 6 January.

"The UBP settlement agreement is the largest feeder fund bank cash settlement to date and the first major international bank settlement, two important milestones for the overall recovery initiative," said Picard.  "All of the funds recovered through the UBP settlement will go into the Customer Fund for distribution to BLMIS customers with valid claims."

"We believe the agreement and the settlement payment represents a good faith, reasonable compromise among the parties involved and, importantly, adds a guaranteed half-billion dollars to the BLMIS Customer Fund sooner rather than later, without the need for protracted litigation," said David Sheehan, counsel to the trustee and a partner at Baker & Hostetler, the court-appointed counsel for Picard.

The statement said that upon approval of the settlement agreement and receipt by the trustee of the settlement payment, all claims by the trustee against UBP and M-Invest in connection with BLMIS will be resolved.