HSBC flags US$1.1bil charge linked to Madoff fraud
HSBC bank revealed today a financial charge of US$1.1 billion linked to money sought by a European fund caught up in the late Bernard Madoff’s huge investment fraud.
The London-headquartered lender revealed the fallout amid a Luxembourg lawsuit brought by Herald Fund dating back to 2009, when Madoff was sentenced to 150 years in prison for running a pyramid-style scheme.
HSBC said it was setting aside US$1.1 billion in a provision to be included in its third-quarter (Q3) results due tomorrow.
Its share price was down around 1% in early London deals following the news.
It comes after HSBC on Friday lost part of an appeal in a Luxembourg court ruling.
The bank on Monday said “the eventual financial impact could be significantly different” to the money it is setting aside.
New Yorker Madoff conned tens of thousands of people around the world by running a shell pyramid, or Ponzi, scheme – where new clients’ capital was stolen to pay off existing clients and create the illusion of returns, until it collapsed.
His fraud was revealed during the financial crisis in 2008 when he was unable to satisfy growing client demands to withdraw their investments, and many lost their savings or were unable to retire.
Madoff died in prison in 2021 following chronic kidney failure.
