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Bankruptcy Trustee Accuses Madoff Bankers Of Financial Fraud

Posted By admin || 13-Dec-2010

Bankruptcy Trustee Accuses Madoff Bankers Of Financial Fraud

In another twist in the Madoff bankruptcy drama, bankruptcy trustee Irving Picard has filed lawsuits against JPMorgan Chase and HSBC accusing them of failing to protect their customers and of financial fraud and misconduct.

The high-profile lawsuit by Madoff bankruptcy trustee Irving Picard against JPMorgan Chase (JPM) and HSBC (HBC) is just one of a number of lawsuits focusing on the scope of a bank's responsibility to protect its customers. , accusing the bank of "aiding and abetting Madoff's fraud" during its "decades-long role" as the primary banker for Bernard L. Madoff Investment Securities.

Separately, HSBC is being sued for 24 counts of financial fraud and misconduct by Picard, who is seeking to recover "at least $9 billion" from the London-based bank on top of unspecified damages. The suit claims that HSBC, which marketed Madoff's funds overseas, was "willfully and deliberately blind to the fraud."

The bankruptcy trustee in the Madoff case is charging the banks with failing to protect its customers from the Ponzi scheme.  But some analysts are questioning whether or not a bank is responsible for protecting their customers; especially those customers who are suppose to be sophisticated investors.   But isn't there a reasonable expectation that a bank such as HSBC and JPMorgan Chase would not be involved in a Ponzi scheme such as the one run by the now bankrupt Madoff?  Also, wouldn't a sophisticated bank such as HSBC and JPMorgan Chase be able to see the signs that the so-called investment program was nothing more than a scam designed to bilk investors?  That is the argument of the bankruptcy trustee who wants those two banks and others to repay millions of dollars back to the bankruptcy estate.

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