Madoff Trustee Sues HSBC for More Than $9B


Irving Picard, the trustee for the victims of Bernie Madoff’s multi-billion dollar Ponzi scheme, filed yet another lawsuit aimed against a major financial institution over the weekend, this time against global banking conglomerate HSBC (NYSE:HBC).

In the suit against HSBC, Picard alleges the U.K.-based bank helped Madoff’s Ponzi scheme to survive and thrive through the creation and marketing of a international network of feeder funds based in Europe and the Caribbean. Those feeder funds then in turn invested with Madoff even though its clients may have not known they were investing with Madoff.

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Picard is seeking at least $9 billion in damages based on how much HSBC allegedly contributed to Madoff’s investments along with $2.3 billion in what Picard calls fraudulent transfers.

In the complaint, Picard alleges that HSBC knew about the problems with Madoff’s investments and had retained the accounting firm KPMG to audit and identify concerns with Madoff’s investments. According to Picard, KPMG reported to HSBC twice about serious risks surrounding Madoff.

“Had HSBC and the Defendants reacted appropriately to such warnings and other obvious badges of fraud outlined in the complaint, the Madoff Ponzi scheme would have collapsed years, billions of dollars, and countless victims sooner,” Picard said in a statement. “The Defendants were willfully and deliberately blind to the fraud, even after learning about numerous red flags surrounding Madoff.”

Picard’s lawsuit is the latest that he has filed against major financial institutions in recent weeks, the previous being UBS (NYSE:UBS) and JPMorgan Chase (NYSE:JPM), as the trustee comes up on the two-year anniversary and deadline to file complaints related to Madoff’s crimes. Despite his work, Picard has been able to recover only a portion of the billions allegedly lost in Madoff’s Ponzi scheme.

Madoff was arrested and charged with defrauding investors in December 2008 and was later convicted on those charges. He is currently serving a 150-year sentence.

Shares of HSBC were down 0.75% to $52.20 on Monday.

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