Bloomberg News

Madoff Trustee Says Some Common Law Claims Remain Against UBS

July 22, 2011

July 22 (Bloomberg) -- The liquidator of Bernard Madoff’s firm hasn’t withdrawn all common law claims against UBS AG and has left them in place in one of two lawsuits against the Swiss bank, a spokeswoman said.

Trustee Irving Picard sued UBS twice, seeking $2.6 billion and alleging the Zurich-based bank aided Madoff’s fraud by setting up so-called feeder funds and agreeing “to look the other way” at irregularities. He told U.S. District Judge Colleen McMahon in Manhattan this month he would drop some claims and ask UBS only to return money taken from the Ponzi scheme before its 2008 collapse.

The common law claims for damages were dropped in the second, smaller suit against UBS, Amanda Remus, a Picard spokeswoman, said in an e-mail today. They were dropped to persuade the district court judge to leave the case in bankruptcy court, and won’t affect the amounts sought, she said.

“Our decision was meant to promote judicial economy by enabling the district court to leave the bankruptcy case in bankruptcy court,” she said.

UBS, HSBC Holdings Plc, JPMorgan Chase & Co. and UniCredit SpA, sued by Picard with other parties for a combined $90 billion in transfers and damages, took their cases to district court. McMahon and Judge Jed Rakoff have said they will decide if Picard has a right to use common law and other laws to sue for damages.

Fees

Picard’s first suit against UBS demands $2 billion. The second suit, filed in December, asks for $555 million in withdrawals from the con man’s business, plus “millions of dollars” in fees, “in an amount to be determined at trial, for helping deposit money with Madoff,” according to the complaint. Also demanded were unspecified “compensatory and exemplary damages in an amount to be proven at trial.”

Giving up the damages sought in the $555 million suit won’t affect the trustee’s potential recovery from UBS because they duplicate amounts sought in transfers, Remus said.

UBS has said Picard sought more than $2 billion based on common law claims. UniCredit is part of a suit that demands triple damages, or a total of $59 billion.

The cases are Picard v. UBS AG, 11-cv-04212 and 11-cv- 04213, U.S. District Court, Southern District of New York (Manhattan).

--Editors: John Pickering

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net


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