Trustee for Madoff victims seeks $6.6 billion from HSBC
07 Dec 2010
HSBC has been a prominent member of the list of banks with ties to the convicted fraudster and former Nasdaq chairman Bernie Madoff's gigantic Ponzi scheme, ever since his 2008 arrest.
At that time the bank had disclosed lending $1 billion to investors who wished to have greater exposure to the New York financier's investment operations. HSBC had acknowledged that it had acted as a custodian and administrator to several feeder funds that had invested in the scheme.
The financial regulator in Ireland, which is the base for many of the funds is investigating HSBC's role for more than a year. Several lawsuits are pending against the bank in Ireland and France.
The trustee tasked with the responsibility of recovering the funds for Madoff's victims has increased the public pressure with a lawsuit seeking $6.6 billion from the UK-based bank.
The 165-page complaint lodged by Irving Picard, the trustee, highlights HSBC's central role in the huge operation. He claims that 33 per cent of all funds sent to Madoff were funneled through HSBC affiliates.
The lawsuit filed on Friday, alleges that HSBC failed to heed repeated warnings not only from its own staff but also from outside auditors, KPMG, who had pointed out that Madoff posed a fraud risk.