HSBC must disclose Madoff details
HSBC Holdings must disclose how much control Bernard Madoff had over assets the bank transferred from two Dublin funds to the confessed fraudster, a judge ruled today.
“It seems to me as much clarity as can be obtained should be secured at this stage,” Judge Frank Clarke said in court in Dublin.
HSBC, Europe’s largest bank by market value, is facing about 50 investor complaints in Ireland for allegedly failing in its duties as custodian for Thema International Fund and AA (Alternative Advantage) Plc, two funds that suspended redemptions after Madoff’s fraud was uncovered.
Custodians are responsible for oversight of funds, and manage deposits and payments to investors.
Thema and AA asked HSBC to clarify whether Madoff acted as a sub-custodian or in another function, such as a broker dealer, according to the court documents.
This may help them determine ahead of a full trial whether to assert that HSBC didn’t perform the necessary due diligence they expected of a custodian bank, or whether they should assert a different failure of duty.