LONDON (Bloomberg) ? Bermuda-based Alpha Prime Fund Ltd and Senator Fund SPC, two funds sued along with HSBC Holdings Plc by the trustee liquidating Bernard Madoff?s firm, filed so-called cross claims against HSBC to try to recoup damages they incurred in the fraud.
HSBC, which acted as custodian for the funds, failed in its duty to monitor Madoff and profited from his Ponzi scheme at their expense, Alpha Prime and Senator Fund said in a filing. The London-based bank is therefore ?liable for any damages accrued by? the funds, they said in the May 27 filing in US Bankruptcy Court in Manhattan.
HSBC is ?the direct cause of the loss of hundreds of millions of Alpha Prime?s dollars and tens of millions of Senator Fund?s dollars,? they said.
Irving Picard, the Madoff firm?s trustee, sued HSBC and a dozen feeder funds for $9 billion in December, saying they should have known of the fraud. HSBC, Europe?s biggest lender, has asked a district court judge in New York to dismiss Picard?s suit, saying it didn?t know of the fraud and lost $1 billion of its own money investing in funds that in turn put money with Madoff.
The tax and advisory firm KPMG LLP told HSBC about the risks of Madoff?s business in 2006 and 2008, according to copies of the reports obtained by Bloomberg, which was allowed access to them on the condition they not be published.
KPMG identified 25 ?fraud and related operational risks? in the way Madoff received, checked and accounted for client funds, it said in a 56-page report dated February 16, 2006, more than two years before the fraud came to light.
via Funds sue HSBC over Madoff claims | Bermuda International Business.
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