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LONDON (Reuters) - Banking group HSBC (HSBA.L) has settled a case brought by a fund over losses it suffered during the collapse of fraudster Bernie Madoff's financial empire, potentially paving the way for more claims against fund custodians.
The London-based bank said it had settled its dispute with Kalix Fund, which was suing the bank in Dublin for $35.6 million.
"HSBC confirms that it has reached an amicable settlement with Kalix Fund Limited, subject to obtaining any necessary approvals," the bank said in an emailed statement on Monday, without disclosing terms.
British Virgin Islands-registered Kalix Fund was an investor in Thelma International Fund, for which HSBC, as custodian, was responsible for managing its deposits and payments. Thelma had invested money with Madoff.
Thelma was a so-called Undertakings for Collective Investment in Transferable Securities (UCITS) Fund, a European Union regulated investment fund.
Madoff, arrested in December 2008, pleaded guilty in 2009 to running a giant Ponzi scheme and is currently serving a 150-year prison sentence.
His victims included several prominent investors who had given money to the swindler.
The settlement could encourage others to pursue claims against banks which acted as custodians for investors in Madoff.
"This settlement is an important development in the recovery process for investors in UCITS Madoff "feeder-funds" established in Ireland or Luxembourg," said Deminor, a Brussels-based investor services firm advising around 2,500 non-U.S. investors who lost money in the Madoff scandal.
"Even though the terms of the settlement are not known, it shows that a custodian bank has been willing to compensate the true victims of the Madoff fraud, i.e. the final investors."
Reporting by Tommy Wilkes