Luxembourg Regulator Censures UBS Over Bernard Madoff

Luxembourg Regulator Censures UBS Over Bernard Madoff - 2/26/2009

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2009 News and Press Releases

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Luxembourg Regulator Censures UBS Over Bernard Madoff
Christine Seib in New York and Susan Thompson - The Times

Securities Docket. February 26, 2009
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EXCERPT: UBS was accused of “serious failure” yesterday by Luxembourg’s financial watchdog as part of its investigation into investments that funds based in the country made in Bernard Madoff’s alleged $50 billion Ponzi scheme. Commission de Surveillance du Secteur Financier in particular emphasised the weak execution of the bank’s due diligence obligations over its custodianship of a $1.4 billion fund, Luxalpha, that invested in Mr Madoff’s scheme. The regulator deemed this a serious failing in the bank’s duties. It has given the bank three months to show it has put in place the infrastructure necessary to improve its procedures and structures and to pay compensation. UBS disagreed with the accusations and said it will defend itself vigorously. The Swiss banking giant added in a statement: “Documentation for the fund made it very clear the company was not expected to be responsible for the safekeeping of the assets. The fund documentation contained an explicit waiver to that effect. UBS does not have responsibility to these shareholders for the unfortunate results of the Madoff scandal.” American regulators charged four men with fraud yesterday over three separate alleged investment scams worth a total of nearly $700 million. It was the latest flurry of moves by the FBI and the Securities and Exchange Commission (SEC) after high-profile actions against Bernard Madoff and Allen Stanford, the Texan billionaire. More frauds are expected to come to light as the recession forces investors to withdraw money from funds, making it impossible for fraudsters to meet redemptions.

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