Herald Fund Sues HSBC Over Madoff Losses, $2 Billion
By Stephanie Bodoni, Bloomberg.com
HSBC Holdings Plc’s Luxembourg unit was sued by Herald Fund SPC, which lost money invested with Bernard Madoff, seeking the assets the bank reported in its last net asset value calculation as custodian.
The Herald Fund filed a lawsuit in Luxembourg today seeking about 1.6 billion euros ($2.15 billion) that HSBC Securities Services Luxembourg held in cash and shares for the fund, said Andre Lutgen, a lawyer for the fund. HSBC failed to protect the funds by employing Bernard L. Madoff Investment Securities LLC as a sub-custodian, Lutgen said.
The case is the second in Luxembourg to target HSBC after several lawsuits sought documents or payments from UBS AG, the custodian bank for another Madoff-linked fund. HSBC units provided custodial and administrative services to Madoff-linked funds that had a net asset value of 5.6 billion pounds ($8.13 billion) as of Nov. 30, HSBC said last month.
“We haven’t seen this yet in Luxembourg — a fund suing its custodian — so that in itself is interesting,” said Julian Randall, a London lawyer at Barlow Lyde & Gilbert LLP who isn’t involved in the case. As long as HSBC’s liabilities aren’t clear and more claims are pending, “the bank isn’t likely to make any repayments until it gets a court order.”
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