HSBC to Settle Madoff Lawsuit

HSBC Holdings Plc has published in its regular tree filings that it has agreed to settle a law suit filed against the company by the investors of Dublin based Thema International Fund that had invested in Bernard L. Madoff Securities.

In the settlement agreement announced on Tuesday, HSBC stated that it would pay $62.5 million to the Thema investors for class-action claims brought against the company on the grounds of its failure to spot fraudulence in Mr. Madoff’s Ponzi scheme. However, HSBC deny any wrongdoing and do not accept any liability.

HSBC acted as agent for Thema and other funds and place moneies with Madoff. The plaintiffs had accused HSBC of its failure to conduct proper due diligence on the Madoff Securities hedge fund. The claimants also alleged that the company could not detect the warning signs and breached its duty towards the funds and the investors.

HSBC further commented that though Thema had assets worth $1.1 billion as of November 2008, the real value of the fund was $312 million. Hence, the company is actually paying 20% of the real value of the fund as a part of the settlement deal. In 2009, Mr. Madoff pleaded guilty to running a Ponzi scheme and is currently serving a 150-year prison sentence.

The court-appointed trustee to represent Madoff’s victims,Irvin Picard, had accused the bank of being ‘ wilfully and deliberately blind to the fraud’.

In relation to the other suits outstanding as against HSBC the company confirmed that it has every intention of defending these claims.

Dermot F. Conway
Conways Solicitors