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French Regulator: Banks Should Aid Madoff Investors

By    |   Monday, 06 Jul 2009 09:00 AM

A top French banking regulator said that UBS, the custodian bank to Luxalpha, the primary European fund invested with rogue money manager Bernard Madoff, should refund investors for their losses.

According to a report in the Financial Times, Jean-Pierre Jouyet, president of the Autorité des Marchés Financiers, said custodian banks “are responsible and investors should be compensated.”

The Madoff financial fraud shows the need for “stronger rules to protect investors,” he said. Investors needed to be told of the risks in investments such as the €1 billion, or $1.4bn, Luxembourg-based Luxalpha fund, which placed nearly all of its assets with Madoff.

Not surprisingly, UBS rejected responsibility, saying that investors in Luxalpha were “fully aware of the nature of the investments.”

The Luxalpha fund “was created at the explicit request of wealthy clients who requested a tailor-made fund to enable them to continue investing their assets with Madoff,” a UBS spokesman told the Financial Times. The UBS spokesman added that fund documentation “made it very clear that UBS Luxembourg was not expected to be responsible for the safekeeping of the assets.”

Others resist the call for more regulation of funds and for compensation for Madoff investors.

According to a posting on RonPaul.com, a blog by Rep. Ron Paul (R-Texas), a libertarian-leaning Republican, Bernard Madoff was operating under the supervision of the Securities and Exchange Commission during his crime spree.

“More regulation will only make the job of cunning fraudsters easier because they can claim to be approved by the government,” Rep. Paul said.

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A top French banking regulator said that UBS, the custodian bank to Luxalpha, the primary European fund invested with rogue money manager Bernard Madoff, should refund investors for their losses.According to a report in the Financial Times, Jean-Pierre Jouyet, president of...
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2009-00-06
Monday, 06 Jul 2009 09:00 AM
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