A number of the largest financial institutions in the world are currently facing legal action over their roles in the Bernard Madoff investment fraud scandal.
Madoff, 72, successfully ran a fraudulent Ponzi investment fraud scheme for twenty years, robbing thousands of investors, charities and individuals of an estimated £41 billion over this time.
JPMorgan, HSBC and Swiss bank UBS AG are amongst a number of high-profile banking organisations to face lawsuits for negligence, aiding or abetting fraud or misconduct. The lawsuits aim to recoup some of the money lost by victims in the lengthy Madoff scam.
JPMorgan is reportedly facing a £4.1 billion lawsuit for its alleged role in the scandal, with Irving Picard – the trustee for approximately 15,000 Madoff victims – accusing the bank of “aiding and abetting” the financial fraud. JPMorgan has refuted the allegations, saying:
“Contrary to the trustee’s allegations, JPMorgan did not know about or in any way assist in the fraud orchestrated by Bernard Madoff.”
Despite the fact that each organisation is likely to have professional indemnity insurance in place, the lawsuits are looking set to be extremely expensive. UBS AG is facing a lawsuit worth £1.27 billion and HSBC has been sued for approximately £5.76 million by Picard, who alleges that the bank was:
“wilfully and deliberately blind to the fraud even after learning about numerous red flags surrounding Madoff,”