According to the complaint, this matter involves a massive and unprecedented Ponzi-scheme. Over the past several years, Madoff and BMIS amassed billions of dollars in private investments. On December 11, 2008, Madoff was arrested by federal authorities after confessing to his children that he was operating a $50 billion Ponzi scheme, in which Madoff used the investments of new clients to pay for fictitious "returns" to other clients. Madoff and BMIS were charged with securities fraud by the SEC. They both were also criminally charged with securities fraud by the U.S. Attorney's Office in the Southern District of New York.
After Madoff was arrested, numerous investment funds disclosed that they were little more than feeder funds for Madoff and BMSI. Such funds included the Herald, Primeo, and Thema Funds. They each sought funds directly from investors, and delivered, or fed the investments they received to Madoff. Medici controlled the Herald, Primeo, and Thema Funds, and caused these funds to be fed to Madoff.
On January 26, 2009, the plaintiffs filed an Amended Complaint.
On October 5, 2009, Judge Richard M. Berman signed the Order granting in part and denying in part the motions for consolidation and appointment of lead plaintiff and lead counsel [# 15, 19, 23, 38, and 41]. The above-captioned actions are consolidated for pretrial purposes only. The actions are consolidated under the caption "In re Herald, Primeo and Thema Funds Securities Litigation," under File Number 09 Civ. 289 (RMB) (HBP). Repex Ventures is appointed Lead Plaintiff and Stull, Stull and Brody is appointed Lead Counsel of the Repex action; Cabilly is appointed Lead Plaintiff and Cohen Milstein is appointed Lead Counsel of the Leonhardt action; and Davis is appointed Lead Plaintiff and Murray, Frank & Sailer LLP is appointed Lead Counsel of the Perrone action. Lead Counsel are directed to coordinate their efforts so as to avoid any duplication of effort and/or unnecessary expense.
Going forward, the named plaintiff in the Repex action may seek damages on behalf of itself and other investors in the Herald Funds; the named plaintiff in the Leonhardt action may seek damages on behalf of himself and other investors in Primeo Funds; and Fabian Perrone, a named plaintiff in the Perrone action, may seek damages on behalf of himself and other investors in the Thema Fund.
On October 13, 2009, an Order was filed withdrawing Murray, Frank & Sailer LLP as Lead Counsel and appointing Johnson Bottini, LLP as sole Lead Counsel in the Perrone action. On February 11, 2010, an Amended Complaint was filed.
On June 21, 2011, a motion to approve partial settlement was filed. The settlement will settled claims with Defendants HSBC Securities Services (Ireland) Limited
(“HSSI”), HSBC Institutional Trust Services (Ireland) Limited (“HTIE”), and HSBC Holdings plc, in the amount of $62.5 million. On June 29, 2011, the defendants filed a joint motion to dismiss.
According to the Decision and Order signed by Judge Richard M. Berman on September 7, 2011, having reviewed the record herein and applicable legal authorities and heard orally from the parties on several occasions including today, the Court hereby respectfully denies the motion, filed June 21, 2011 by Lead Plaintiff Neville Seymour Davis ("Davis"). The motion seeks preliminary approval of partial settlement of one of three purported class actions pending before the Court. The Court concludes (as will be set forth in greater detail in a written opinion in the next seven to ten days) that the proposed settlement agreement, entered into on June 7, 2011 and amended on August 11, 2011 ("Proposed Partial Settlement") between Davis and Defendants HSBC Institutional Trust Services (Ireland) Ltd., HSBC Securities Services (Ireland) Ltd., HSBC Holdings PLC, and proposed defendant HSBC Bank USA, N.A. (collectively, the "HSBC Defendants"), is not "fair, reasonable [or] adequate" even at this preliminary stage - to members of the proposed class of investors in Thema International Fund plc, whose interests Davis purports to represent.
According to a press release dated November 28, 2011, the company is out with its own news, however, saying Monday said that HSBC companies defending a class action by investors whose assets were invested with Bernard L Madoff Securities LLC have entered into an agreement to settle the claims. HSBC will pay from $52.5 million up to a maximum of $62.5 million.
According to the Decision and Order dated November 29, 2011, the Plaintiff Daviss claims against the Madoff Defendants are severed from this consolidated action and stayed; Plaintiffs claims against Erko, Inc., Windsor IBC, Inc., Infovaleur, Inc., and Eurovaleur, Inc., among other parties, are dismissed for failure to serve and for failure to prosecute; Defendants motion to dismiss [#252] is granted; Plaintiffs Davis and Repexs claims against JPM and BNY are dismissed under SLUSA and, alternatively, the Martin Act; Plaintiffs claims against the remaining Defendants are dismissed based upon forum non conveniens in favor of Ireland (Thema action) and Luxembourg (Herald and Primeo actions); and Plaintiffs motion to amend [#191] their respective amended Complaints is respectfully denied as futile. The Courts ruling is stayed temporarily only as it relates to Plaintiff Daviss claims against the HSBC Defendants, as described above.
According to the Clerk's Judgment entered on December 12, 2011, for the reasons stated in the Court's Decisions and Orders dated November 29, 2011 and December 8, 2011, the stay by this Court in its Decision and Order, dated November 29, 2011, with respect to Plaintiff Davis's claims against HSBC Trust, HSBC Securities, and HSBC Holdings is lifted, and such claims are dismissed on the basis of forum non conveniens, as set forth in the November 29, 2011 Decision and Order; Plaintiff Davis's claims against the Madoff Defendants are severed from this consolidated action and stayed; Plaintiffs' claims against Erko, Inc., Windsor IBC, Inc., Infovaleur, Inc., and Eurovaleur, Inc., among other parties, are dismissed for failure to serve and for failure to prosecute; Defendants' motion to dismiss is granted; Plaintiffs Davis and Repex's claims against JPM and BNY are dismissed under SLUSA and, alternatively, the Martin Act; Plaintiffs claims against the remaining Defendants are dismissed based upon forum non conveniens in favor of Ireland (Thema action) and Luxembourg (Herald and Primeo actions); and Plaintiffs' motion to amend their respective amended Complaints is denied as futile; accordingly, these consolidated cases are closed, except as to Plaintiff Davis's claims against the Madoff Defendants, which is placed on the suspense calendar.
On January 10, 2012, the plaintiff filed a Notice of Appeal. The appeal is currently pending in the Second Circuit Court of Appeals.