HSBC Faces Madoff-Linked Repayment Claims in Dublin
Thursday, October 15, 2009 : PermalinkBloomberg – HSBC Holdings Plc, Europe’s largest bank, is facing lawsuits in Ireland by investors faulting the lender for how it performed as custodian for money lost in Bernard Madoff’s $65 billion Ponzi scheme.
A Dublin court may rule tomorrow on whether investors must wait to pursue claims against HSBC until suits by mutual funds that used the bank as a custodian are resolved. Two Irish funds suspended redemptions due to exposure to Madoff.
Custodian banks, especially those serving European Union- regulated funds that are typically low risk, face scrutiny as the European Commission seeks to increase their responsibilities after the Madoff scandal. Investors in Luxembourg and Ireland, Europe’s biggest and third-largest mutual fund markets, have sued custodians, asking courts to break legal ground by ordering them to repay billions of dollars lost in Madoff’s fraud.