Madoff trustee sues HSBC for $9 billion

Headline News

The court-appointed trustee liquidating Bernard Madoff's former investment firm has filed a lawsuit against HSBC for $9 billion for allegedly aiding the most massive Ponzi scheme in history.

The trustee, Irving Picard, alleged that London-based HSBC Holdings PLC (HBC) enabled Madoff's fraud "through the creation, marketing and support of an international network of a dozen feeder funds based in Europe, the Caribbean, and Central America," in a statement released Sunday.

He claimed that HSBC and the feeder funds funneled more than $8.9 billion to Madoff's fraudulent investment advisory business, and earned hundreds of billions of dollars despite being "well aware" of the fraud after accounting firm KPMG twice notified the bank of "serious risks."

"Had HSBC and the defendants reacted appropriately to such warnings and other obvious badges of fraud outlined in the complaint, the Madoff Ponzi scheme would have collapsed years, billions of dollars, and countless victims sooner," Picard said in the statement.

David Sheehan, counsel for the trustee, said HSBC and the feeder funds' "financial sophistication" gave them insight to Madoff's scheme "long before his confession and arrest," but "each possessed a strong financial incentive to participate in, perpetuate and stay silent about Madoff's fraudulent scheme."

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