01 Jul 2009, David Benyon, Operational Risk & Regulation
NEW YORK - Spain's largest bank, Banco Santander, has agreed to settle claims related to investments in Bernard Madoff's scheme by two hedge funds operated by its Optimal Investment Services unit. The bank will pay $235 million in an out-of-court deal to the trustee liquidating Madoff's money-management firm.
The settlement was reached in an attempt to avoid a lawsuit by the trustee, Irving Picard, who has been suing Madoff's biggest investors. It is equal to 85% of Picard's claim against Santander.
"We hope that other entities against which we have claims will likewise come forward to settle those claims for the benefit of all of Madoff's victims," Picard said in a statement.
Santander said in a statement: "The funds' potential clawback liability did not imply any wrongdoing by the funds. The trustee concluded that their conduct does not provide grounds to assert any claim against the Optimal companies or any other entity of the Santander group, other than the clawback claims."
Picard has now collected $1.22billion to help repay Madoff's victims. He has also filed a clawback lawsuit against three Fairfield Greenwich Group hedge funds for the return of $3.54 billion withdrawn before Madoff's fraud unravelled. This joins several other suits filed by Picard that seek a total of $10.1 billion from investors he claims should have known of the fraud. the trustee is also seeking about $735 million from Madoff customers outside of court.
Madoff pleaded guilty to running a $65 billion ponzi scheme and will be sentenced in July.
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