Business Irish

Tuesday 12 December 2017

IFSC-based firm still exposed to lawsuits from Madoff scandal

Bernie Madoff is in prison
Bernie Madoff is in prison
Sarah McCabe

Sarah McCabe

An IFSC-based firm that promotes investments in hedge funds and bonds is still exposed to lawsuits from the Bernie Madoff scandal, four years after the US money manager was jailed for running a vast ponzi scheme.

Pioneer Global Investments, which employs 115 staff in Dublin, is involved in marketing and promotion activities for the Pioneer group. The firm was involved in marketing hedge funds and bonds or "notes" caught up in Madoff's global pyramid scheme.

Madoff earned notoriety in 2008 when he admitted to running an $80bn (€55bn) ponzi scheme, wiping out the savings of investors. He was sentenced to 150 years in prison in 2009.

The latest set of accounts filed for Pioneer Global Investments show that as fund promoter it is still open to legal action relating to this, even though criminal proceedings in Chile regarding the notes were closed in July 2012.

It said it is not able to predict the extent of this potential liability.

Pioneer Global Investments is one of two Irish offshoots owned by Italy-based Pioneer Global Asset Management, whose ultimate parent is Italian banking giant UniCredit. Its Irish operations are located on Dublin's George's Quay.

In total, the group employs about 400 people in Ireland, led by American chief executive Robert Richardson.

The accounts show that while sales jumped by more than €8m to €37m at Pioneer Global, the company made a pre-tax loss of €6.6m in 2012 compared to a €4.1m profit in 2011.

It now has 115 staff, up from 95 in 2011. These extra employees added €5m in costs. Operating expenses jumped as a result, up 30pc from €28m to €37m.

The company also took a major impairment charge after it was forced to shut a newly-acquired business.

The business, taken over at the start of 2012, was mainly involved in managing a fund known as the Pioneer Long Short European Equity Fund (PLSEE).

This was hit by "a number of unfavourable developments". It became unviable and had to be closed, contributing to a €3.3m impairment charge.

The company also acquired business from group branches in Zurich and Geneva for €300,000 which it says are performing well.

It said the outlook for 2013 is one of "continued challenges".

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