HSBC fights back over Madoff action


The lawyer in charge of recovering losses for victims of disgraced financier Bernard Madoff is suing HSBC for nine billion US dollars

British banking giant HSBC says it will “vigorously” defend itself against “unfounded” claims made by the lawyer in charge of recovering losses for victims of disgraced financier Bernard Madoff

Court-appointed trustee Irving Picard has accused the bank of helping Madoff by creating so-called feeder funds for the convicted fraudster’s investment firm and is suing the bank for nine billion US dollars (£5.7 billion).

Mr Picard has also accused HSBC of ignoring warnings from its own accountants that Madoff’s huge investment record was suspicious.

Madoff is serving a 150-year term for a 65 billion US dollar (£41 billion) fraud. He admitted deceiving thousands of investors through a “Ponzi” scheme, which paid out using new investors’ money rather than from any profits.

A spokesman for HSBC said: “HSBC is defending itself vigorously against Madoff-related claims that have been brought against it in various jurisdictions around the world.

“HSBC believes that the US court-appointed trustee’s claims of wrong-doing are unfounded and it will defend itself vigorously against those claims as well.”

The lawsuit, which contains 24 counts of alleged financial fraud and misconduct by HSBC, was filed at the US Bankruptcy Court in New York.

Mr Picard named other defendants in the filing, including the management companies and providers of the feeder funds, which are funds that conduct most of their investing through other funds.

He alleges that the defendants were well aware of the signs of fraud that were already circulating around Bernard L Madoff Investment Securities (BLMIS).

HSBC had twice asked accountants KPMG to identify concerns with BLMIS, and KPMG twice reported serious risks already known to HSBC, Mr Picard claims.

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