Citigroup in Madoff row

 
City A.M. Reporter
CITIGROUP tried to pass on its exposure to Bernard Madoff to other banks just months before his epic fraud was revealed, the Madoff trustee said in a lawsuit accusing a second major US bank of unsavoury dealings with the financier.

Trustee Irving Picard said red flags about Bernard L. Madoff Investment Securities were apparent to Citi as early as 2005, according to court papers. The lawsuit seeks $425m (£263m) from the bank.

Citi said in a statement yesterday that the allegations in the lawsuit were false and it would “vigorously defend against these claims”.

Madoff, now serving a 150-year sentence, was arrested in December 2008 after admitting he ran a decades-long, multibillion-dollar swindle.

Picard also has sued JPMorgan Chase & Co, Madoff’s primary banker, for $6.4bn, alleging the bank turned a blind eye to Madoff’s scheme.

Portions of both lawsuits were edited to conceal names. The lawsuit against Citi was filed on 8 December in US Bankruptcy Court in New York.

It cited a September 2008 email by a Citigroup Global Markets trader to another bank saying: “We’re needing to terminate our Madoff trade. Do you have appetite for that risk over there?”