Show Hide image

HSBC sued for $9bn over Madoff fraud

Banking giant accused of being "wilfully and deliberately" blind to Madoff's Ponzi scheme

Europe's biggest bank HSBC is being sued for $9bn (£5.7bn) for being "wilfully and deliberately" blind to Bernard Madoff's multibillion-pound Ponzi scheme despite warnings from its own auditor.

Irving Picard, the court-appointed trustee charged with recouping assets for victims of the fraudster, has filed a lawsuit with the US Bankruptcy Court in New York, alleging that HSBC ignored "red flags" that could have brought the scam to light years earlier.

David J Sheehan, the lawyer representing Picard, said the bank "possessed a strong financial incentive to participate in, perpetuate, and stay silent about Madoff's fraudulent scheme."

But HSBC stated it would "defend itself vigorously" against the allegations and said the trustee's claims of wrongdoing were "unfounded".
In the lawsuit, Picard has accused the bank of indulging in 24 counts of fraud and misconduct.

HSBC's auditor KPMG had twice reported serious risks regarding Madoff's investment funds, but Picard alleged that the bank chose to ignore its accountant's warnings.

HSBC is the third major bank to be named in the lawsuit over the fraudulent Ponzi scheme that has landed Bernard Madoff in jail for 150 years. Earlier, similar suits had been filed against JPMorgan and Swiss lender UBS for $6.4bn and $2bn respectively.