HSBC pays $62.5m to end Madoff case
Wednesday 08 June 2011
HSBC is paying $62.5m (£38m) to settle legal claims from investors who lost money in Bernard Madoff's record-breaking pyramid scheme.
The bank provided administrative services to a number of the so-called "feeder funds" which funnelled money to Madoff. Investors in one Irish fund, Thema International, sued in a New York court, claiming that HSBC should have known they were pouring their money into a black hole.
HSBC settled the lawsuit without admitting it did anything wrong, and it said yesterday that it would continue to vigorously defend other lawsuits from other Madoff investors and from the trustee of Madoff's fund, who is trying to claw back money for victims of the fraud. HSBC is defendant in a $9bn lawsuit from the trustee, Irving Picard, who says it was "deliberately blind" to the fraud. The bank denies that, and says it lost $1bn of its own money.
Madoff is serving a 150-year sentence in a US jail.
Thema believed it had $1.1bn in assets with Madoff, based on his fictitious returns on its original $312m investment. The fund was controlled by Bank Medici of Austria.
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