UBS escapes Madoff claims
INVESTORS who lost money to US swindler Bernard Madoff through a fund set up by UBS cannot seek compensation directly from the Swiss bank, a Luxembourg court ruled yesterday, relieving pressure on UBS.
The court rejected the demands of a small group of investors in the LuxAlpha fund looking to file individual claims against UBS rather than going through the fund’s liquidators.
The ruling was good news for UBS, lawyers said, because it could cut compensation costs and the public relations fall-out for the bank would be limited to a single case for each fund. “UBS welcomes the clarification of Luxembourg law as expressed by today’ s decisions of the Luxembourg Commercial Court,” the bank said in a statement.
Franc Greff, who represents clients in four of the 10 cases being reviewed, said he would appeal the decision.
Madoff, a former non-executive chairman of the Nasdaq stock market, is serving a 150-year term in a US prison after pleading guilty last year to a worldwide Ponzi scheme that ruined large and small investors, including charities.
The LuxAlpha liquidators, appointed by a judge in April 2009 to recoup investor losses, filed a lawsuit in December, suing UBS, the fund’s manager and Luxembourg’s financial regulator among others.
The verdict could affect many pending cases against UBS, which acted as a custodian for, but did not run, the LuxAlpha and LuxInvest funds, which lost a total of about $1.7bn (£1.2bn) to Madoff.
It could also signal that investors who lost nearly $1bn to Madoff from investments in Herald, a fund of HSBC’s Luxembourg arm HSSL, will have to follow the same path.