Legal

20 European Banks To Reimburse Madoff Victims - Action Group Lawyer

Tom Burroughes, Group Editor, London, 26 May 2010

articleimage

A total of 20 European banks have agreed to reimburse non-US investors for $15.5 billion of losses caused by the jailed Ponzi fraudster Bernard Madoff but some Swiss lenders have yet to do so, a lawyer for victims has been quoted by Reuters as saying.

Javier Cremades, who helped create a legal network to pursue Madoff investor claims, was quoted saying he arrived at the $15.5 billion sum, covering 720,000 investors, based on a survey of law firms in the network. However, he declined to name most of the banks or the amounts that each bank had agreed to pay.

However, he did name HSBC as among the settling banks. A source close to HSBC said that bank was not aware of any such settlement. HSBC declined to comment, the report said.

The Madoff affair, which was the most spectacular example of fraud to have emerged amid the financial turmoil, has led to soul-searching in the wealth management industry, prompting industry figures to ask why not enough was done to identify Madoff’s fraud and act on warnings that had arisen.

Cremades said lenders in France, Germany, Portugal, Spain and the UK are among the settling banks, while Swiss lenders have resisted in part because of secrecy laws.

"Many investors outside have non-declared money," said Cremades, president of the Madrid law firm Cremades & Calvo-Sotelo. "The Swiss system is the toughest one."

He was quoted saying that settling ought to be "not expensive at all" for lenders that might otherwise face a "huge reputational issue" by holding out, "at a time confidence is not in abundance".

Madoff is serving a 150-year sentence at a North Carolina federal prison. Five others have also faced criminal charges over what prosecutors call a $65 billion Ponzi scheme.

In March, UBS, meanwhile, scored an important victory after a Luxembourg court ruling that potentially nullified hundreds of claims by investors who lost money in funds affected by the Madoff fraud. The ruling was also a victory for the accountancy firm, Ernst & Young, which was involved in the case.

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes