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Saturday 3 December 2016

HSBC should reveal internal reports on Madoff risks, judge says

Published 19/08/2010 | 15:07

HSBC Holdings Plc, Europe’s biggest bank, should turn over internal reviews of fraud and other operational risks at Bernard Madoff’s business from 2006 and 2008, a New York judge ruled.

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U.S. Bankruptcy Judge Burton Lifland, in an Aug. 17 ruling, asked the High Court in London to order HSBC to hand over all reports, contracts, audio recordings and documents related to examinations conducted by an affiliate of KPMG International. HSBC acted as custodian bank for several funds that invested with the con man.

The last review was commissioned by HSBC in September 2008, about three months before Madoff’s arrest, according to the ruling. London-based HSBC and trustee Irving Picard in New York reached an agreement on which documents should be turned over if the order is issued, Manhattan court filings show.

HSBC and UBS AG, based in Zurich, face dozens of investor lawsuits in Europe over claims they failed in their duties as custodians for European Union-regulated funds. Banco Santander SA, the Spanish bank that lost $3.2bn (€2.5bn) in the scam, was sued by investors for allegedly identifying risk tied to Madoff’s secrecy and accounting practices without notifying customers.

Picard is suing hedge funds and other parties that profited from the $65bn (€50bn) fraud to repay victims. Madoff, 72, pleaded guilty last year and is serving a 150-year sentence.

HSBC spokesman Adrian Russell had no immediate comment when reached by phone.

Bloomberg

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