Santander offers 1.38 billion euros to Madoff investors

David Benyon
28 Jan 2009

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Regulation

MADRID - Spanish bank Santander has offered €1.38 billion in compensation to individual clients exposed to Bernard Madoff's $50 billion hedge fund-cum-ponzi scheme unearthed in December 2008.

The €1.38 billion (£1.28 billion) will be used to pay individual investors but not institutions caught by the Madoff pyramid scheme. Santander will issue the €1.38 billion in preferential shares with an annual 2% coupon to compensate its clients, costing €500 million.

Santander-operated hedge fund Optimal Strategic US Equity used Madoff's scheme to handle client investments, losing €2.3 billion to the fraudster. Paul Marshall, the co-founder of the Marshall Wace hedge fund, told a UK Treasury Committee yesterday that it is "very unlikely" a Madoff-type scheme could operate in the UK, but that hedge fund disclosures should be generally improved.

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