HSBC Liable for Ignoring Madoff-Linked Loss: Investors

HSBC Liable for Ignoring Madoff-Linked Loss: Investors
HSBC Holdings Plc (HSBA) failed to keep millions in clients’ assets invested with Bernard Madoff safe “under lock and key,” investors in an Irish fund said. Kalix Fund Ltd. invested in Thema International Fund Plc (TIFHUQE), which in turn invested with Madoff. London-based HSBC, as Thema’s custodian, didn’t act in time to protect investors’ money from fraud, even though it knew of the risks of dealing with Madoff, a lawyer for Kalix told Judge Peter Charleton in a Dublin court today. The lender also handed over custodian duties to Madoff and then tried to conceal it, the lawyer said.
“The fund was paying a custody fee to HSBC where the bank had delegated that role to somebody else who wasn’t charging,” said John O’Donnell, the lawyer for Kalix. “The obvious and most egregious mistake” by HSBC was taking “no steps from outside the Madoff organization to make sure that the assets were safe.” More on Bloomberg Businessweek here.