HSBC cancels $62.5m settlement over Madoff fund
HSBC has terminated a $62.5m class action settlement with investors in a fund exposed to Ponzi fraudster Bernard Madoff’s wealth management business.
The move comes after a New York court dismissed claims against the FTSE 100 bank and other defendants.
According to the bank, the decision was based “in part on a finding that Ireland was a more appropriate forum to litigate the plaintiff’s claims”.
Investors in the Irish-domiciled Ucits fund Thema International – for which HSBC had provided custodial and administration services – whose assets had been invested with Bernard L Madoff Securities had named the bank as a defendant in a class action in New York.
A settlement announced toward the end of last year had been capped at a maximum $62.5m. However, it had been subject to a number of conditions. (article continues below)
The court “declined to consider whether to grant approval of the proposed settlement between HSBC and the plaintiff, as was required for the settlement to become effective”.
Following the court’s decision HSBC terminated the settlement, which would have seen it pay out at least $52.5m.
The plaintiffs in the case has contested HSBC’s right to terminate the settlement and are appealing the court’s decision.
Madoff was sentenced to 150 years in prison in 2011 after being convicted over charges related to his giant ponzi scheme.