Santander to pay out over Madoff claim
SPANISH banking giant Santander has agreed to pay $235m (£148m) to a trustee representing victims of Bernard Madoff’s $65bn alleged fraud, to avoid a claim against two hedge funds managed by its Optimal investment unit.
The settlement represents the first big victory for the trustee, Irving Picard, who has filed suits against a bevy of investors and funds that profited from Madoff’s dealings. He aims to recover some $14bn for victims of the alleged fraud.
Santander is thought to have agreed on the settlement to avoid a full-blown high-profile lawsuit.
Speaking after the settlement, Picard said the payout was 85 per cent of what he had been seeking from Optimal, but added that the agreement could set a precedent for further payouts.
“We hope that other entities against which we have claims will likewise come forward to settle those claims for the benefit of all of Madoff’s victims,” he said.
The latest settlement will bring the total amount that Picard has collected on behalf of Madoff investors to more than $1.2bn.
Under US law, investment institutions that withdrew funds in the 90 days leading up to Madoff’s arrest are subject to demands to pay back their investors.
Santander would not confirm whether or not Optimal had withdrawn funds during that period but said it would issue a more detailed statement at a later date.
The bank sent director Rodrigo Echenique to meet Madoff in New York on 27 November last year, less than a month before his arrest, but it would not say whether the purpose of the trip had been to extract funds.
Santander, the largest bank in Europe, has said that it lost up to €2.33bn through its Optimal funds as part of the alleged fraud.
The bank has already offered compensation to private banking clients who lost a combined €1.38bn, with 93 per cent accepting the offer.
Madoff pleaded guilty in March to operating a $65bn “Ponzi” scheme in which investors were given false returns taken from the funds of other investors.