HSBC Holdings PLC
Lawyers for the bank argued in Manhattan federal court on Thursday evening that the law did not allow trustee Irving Picard -- trying to recover money for former Madoff customers -- to bring the case of financial fraud and misconduct against HSBC. The bank has denied the allegations.
I am going to spend a lot of time re-reading the papers, U.S. District Judge Jed Rakoff said at the end of oral arguments. I will commit to a written decision by the end of July.
In all, the judge will be making decisions on challenges to five lawsuits filed by the trustee against banks amounting to nearly $100 billion.
Picard, the court-appointed trustee liquidating former financier Bernard Madoff's firm after the collapse of his multibillion-dollar Ponzi scheme, last December accused HSBC of enabling the fraud. A Ponzi scheme is one in which old clients are paid with the money of new investors.
The trustee's lawsuit, filed in U.S. Bankruptcy Court in New York, said the bank created, marketed and supported an international network of a dozen feeder funds based in Europe, the Caribbean, and Central America.
Madoff, 73, who was arrested in December 2008 and admitted orchestrating a decades-long fraud, is serving a 150 year-long prison term after pleading guilty to criminal charges in March 2009.
In legal briefs and in court, lawyers for HSBC argued that the Securities Investor Protection Act neither cloaks the trustee with the mantle of exclusive champion of customer property nor provides him with weapons necessary to carry out such a crusade.
Oren Warshavsky, a lawyer for the trustee, argued on Thursday that we say they are like the fellows helping the thieves.
The case is Irving H. Picard v. HSBC Bank PLC et al, U.S. District Court for the Southern District of New York, No. 11-00763.
(Reporting by Grant McCool, editing by Bernard Orr)