Madoff trustee set back in lawsuits vs banks

In his complaint, Picard accused HSBC, UniCredit and Pioneer of violating a duty to Madoff's customers by failing to detect the Ponzi scheme and ignoring "red flags" of the fraud.

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But Rakoff said a federal law addressing the liquidation of brokerages "conveys no authority" on a trustee to bring such claims. These claims included aiding and abetting fraud, aiding and abetting a breach of fiduciary duty and unjust enrichment.

"Not every litigant has the right to appear in federal court," Rakoff said.

He directed that what remains of the lawsuit, including efforts to recover $2 billion of so-called "preferential or fraudulent transfers" involving HSBC, return to Manhattan bankruptcy court for further proceedings.

In a statement, a Picard spokeswoman said the trustee and his lawyers are reviewing the decision.

"Prior to a thorough evaluation of the ruling, we have no comment," she added.

Marco Schnabl, a partner at Skadden, Arps, Slate, Meagher & Flom representing UniCredit, said: "We are pleased with the decision. We're analyzing it to see where we go from here."

HSBC spokeswoman Juanita Gutierrez declined to comment.

Steven Thel, a Fordham University School of Law professor, said the decision could spur new litigation against the banks.

"The claims, if they're good, can still be brought, but they'll have to be brought by the customers," he said. "It will probably come in the form of a class action."