Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, June 7, 2011

HSBC Settles Maoff-Related Class Action with Ireland Fund

HSBC Holdings plc, in an SEC 6-K Report, announced that it has settled for $62.5 million a class action stemming from its role as a custodian to a fund, Thema International Fund, that invested with Bernard Madoff.  According to the report:

As previously disclosed, various HSBC companies provided custodial, administration and similar services to a number of funds incorporated outside the United States whose assets were invested with Madoff Securities. Various plaintiffs have commenced Madoff-related proceedings against numerous defendants in a multitude of jurisdictions. Various HSBC companies have been named as defendants in suits in the United States, Ireland, Luxembourg and other jurisdictions....
One of these funds was Thema, a limited liability company incorporated and authorised in Ireland as a UCITS fund under the European Communities (Undertaking for Collective Investments in Transferable Securities) Regulations 1985. HSBC Securities Services (Ireland) Limited ("HSSI") and HSBC Institutional Trust Services (Ireland) Limited ("HTIE") provided custodial, administration and other services to Thema. HSBC estimates that the purported net asset value of Thema as at 30 November 2008 was US$1.1bn and that Thema's actual transfers to Madoff Securities minus its actual withdrawals is approximately US$312m....
The Settlement, which is solely in respect of investors in Thema, shall in no way be construed or deemed to be evidence of or an admission or concession with respect to any claim of any fault or liability or wrongdoing or damage whatsoever. HSBC considers it has good defences against the Madoff-related claims that have been brought against it and will continue to defend the other Madoff- related proceedings vigorously.

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