Tuesday, April 13, 2010
Sue a Bank?
"A court ruled Thursday that investors who lost money in Bernard Madoff's Ponzi scheme through funds set up by UBS AG can't sue the Swiss bank and its adviser Ernst & Young for the losses they incurred. ... Instead, they must rely on the fund liquidator to obtain compensation for them from UBS. ... One state court in Palm Beach County, Fla., last mont allowed some claims to proceed by investors against a Madoff feeder fund firm, Tremont Group Holdings Inc., and its auditor, KPMG LLP. The court hasn't ruled on the merits of the lawsuit, which alleges professional malpractice, among other things. ... Responding to the ruiling, UBS said only that it welcomes the clarification of the Luxembourg law. The bank has maintained that it set up the fund at the request of wealthy clients who wanted it to invest in Madoff products and doesn't have any responsibility for the result", Mike Gordon at the WSJ, 5 March 2010, link:
This ruling may not be that bad if the liquidator vigorously pursues the claims. If. As to UBS responsibility, was it acting only as a broker or as an adviser?