Madoff suit cites HSBC as a helper | india | Hindustan Times
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Madoff suit cites HSBC as a helper

india Updated: Dec 06, 2010 21:39 IST
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The trustee seeking assets for victims of Bernard L Madoff’s global Ponzi scheme filed a lawsuit on Sunday seeking $9 billion from a roster of defendants headed by HSBC, the London-based financial giant with hedge fund clients that fed piles of cash into the enormous fraud.

According to the complaint, a hedge fund official dealing with HSBC once attributed Madoff's stellar performance — which later turned out to be purely fictional — to a “magic formula” that no one else could replicate.

The lawsuit is the third multibillion-dollar complaint the Madoff trustee, Irving H Picard, has filed against major financial institutions in the last two weeks. It almost certainly will not be the last.

Under federal bankruptcy law, the trustee must file all his recovery claims within two years of the initial bankruptcy filing. That did not occur until December 15, 2008, but the bankruptcy court has defined the filing date as December 11, 2008, the day of Madoff's arrest.

That gives Picard until midnight on Saturday either to sue to recover cash withdrawn from Madoff accounts before the Ponzi scheme collapsed or to seek punitive damages from anyone involved in those withdrawals.

The large banks the trustee has sued - the Swiss-based UBS, JPMorgan Chase in New York, and now HSBC in London.