HSBC HOLDINGS said claims the bank had aided the fraud scheme of convicted swindler Bernard Madoff were unfounded and it would “defend itself vigorously” against all Madoff-related claims.
US court-appointed trustee Irving Picard sued HSBC for $9 billion (€6.8 billion) on Sunday, accusing it of aiding the Madoff fraud through the creation, marketing and support of an international network of a dozen feeder funds.
An HSBC spokesman said the bank was defending itself against Madoff-related claims brought against it in various jurisdictions, including US class action cases.
“HSBC believes that the US court-appointed trustee’s claims of wrongdoing are unfounded and it will defend itself vigorously against those claims as well,” the spokesman said.
The complaint being brought against HSBC mentions “feeder funds” based in Dublin which formed part of the network operated by Mr Madoff.
One of the funds, the Thema International Fund plc, who’s agent is William Fry solicitors, Dublin, received about $692 million in the period since December 2006. The Irish Financial Regulator gave authority to the fund to operate as an UCITS, a type of European derivative designed to facilitate collective investment schemes. Members of the Benbassat family controlled Thema which was used to invest in the Madoff structure.
According to the complaint, the Geneva-based money management business the Benbassats operated began to channel funds into the Madoff schemes in 2002, after they had been introduced to him. In total they funnelled $1.9 billion of investors’ money into the Madoff structures, receiving millions in fee payments in return for their role.
HSBC Institutional Trust Services (Ireland) Ltd, with an address at 1 Grand Canal Square, Dublin, served as a custodian to Thema and other Madoff feeder funds, according to the complaint.
HSBC Security Services (Ireland) Ltd, with the same address, served as an administrator to Thema. Both companies received fees and other funds to which they were not entitled, according to the complaint. Pioneer Alternative Investment Management Ltd is an entity based at George’s Quay, Dublin, which is part of the Unicredit group and was paid substantial fees, which the complaint insists should be returned, for advice.
Earlier hearings in the Dublin courts have indicated that tens of cases are being pursued here against HSBC subsidiaries and others, arising from the Madoff scheme.
