HSBC amends settlement with investors in Irish fund

HSBC Holdings Plc has amended its settlement with investors in an Irish fund who lost their money in Bernard Madoff’s Ponzi scheme after its original offer was rejected by a US judge in September.

The amended settlement, filed in the US District Court in Manhattan yesterday, still offers shareholders in Thema International Fund Plc as much as $62.5 million (€47m), while addressing the court’s earlier concerns, the London-based lender said yesterday in an e-mailed statement.

“The amended agreement addresses certain issues identified by the New York federal court overseeing the case,” HSBC said in the statement.

The amended settlement will still require the court to certify a settlement class, address any new objections and approve it before it takes effect, HSBC said. Details on the settlement weren’t immediately available.

The investors sued Thema, which acted as a so-called feeder-fund steering money to Madoff’s firm, and other defendants, including London-based HSBC, which acted as Thema’s custodian, in January 2009.

The plaintiffs are seeking to represent all Thema investors who lost money when Madoff’s scheme was exposed in December 2008. They claim HSBC, Europe’s largest bank, should have known Madoff was a fraud.

US District Judge Richard Berman in Manhattan rejected the original settlement on September 7, saying it was “not fair, reasonable or adequate”.

Among the “obvious deficiencies” Berman identified was a provision setting aside $10m to pay the fees and expenses of the investors’ lawyers in pursuing claims against non-settling defendants outside the US.