Madoff investors take their fight for compensation to the French courts

News - Banking

Written by Ray Clancy

Tuesday, 30 March 2010 08:22

French investors who lost money to jailed US fraudster Bernard Madoff in a fund connected with Swiss bank UBS are taking their fight to the Paris courts.

Two lawyers representing the investors said the case will be heard at the Paris court of commerce and a third lawyer is considering similar action.

The investors, who lost all their money, accuse the bank of irresponsibility in presenting its LuxAlpha fund as relatively safe and failing to mention the Madoff connection. They are seeking compensation of €100,000 each.

A Luxembourg commercial court has already rejected direct claims by individual investors against the bank and said that claims should go through the Madoff funds’ liquidators.

But the French lawyers believe they have a good chance of success. ‘Given how the case evolved in Luxembourg, we have been in contact with other lawyers. As well as civil claims, we might, where possible, bring criminal complaints,’ said Marc-Pierre Stehlin of law firm Stehlin & Associes.

‘I have summoned UBS before the Paris court of commerce in a claim for damages for having issued a misleading prospectus,’ said lawyer Jean Pierre Martel, founding partner of Orrick Rambaud Martel who represents 80 French investors.

Lawyer Isabelle Wekstein of Wan Avocats said she had also decided on the Paris court of commerce as a jurisdiction for claims on behalf of investors. She is acting for six clients but has another potential 50 pending.

UBS said it will ‘vigorously’ defend its position. ‘UBS has taken notice of the claim brought by French investors in Paris. UBS will vigorously defend its position,’ a spokesman said.

There are many pending cases against UBS as custodian for the LuxAlpha and LuxInvest funds, which lost a total of about $1.7 billion to swindler Madoff, whose fraud has been estimated at as much as $65 billion.

Madoff, a former non-executive chairman of the Nasdaq stock market, is serving a 150-year jail term in the United States after pleading guilty last year to a multi-billion-dollar scheme that ruined large and small investors.

LuxAlpha, which invested 95% of its assets with Madoff, said it had $1.4 billion in net assets a month before Madoff’s arrest in December 2008. The fund was dissolved and is being liquidated. The liquidators for LuxAlpha in December filed their own lawsuit against UBS.