The lawyers Madoff bonanza is rolling - banks like HSBC,UBS ,SANTANDER will have to pay

The Madoff scam goes to the next level as all middleman as custodians and fund of funds will rightly be sued. Some of the have even money (although at the end of the day it will be taxpayers money again - which is outrages) like UBS ,HSBC and Santander which did not live up to their duties and Fund of Fund managers which might not have the funds anymore to payback. In any case those who have should hold responsible also by legal prosecution. In cases of fraught this overpaid CEO should be hold responsible at least to the magnitude that all bonus ever received has to be returned to shareholders or ın this case taxpayers. Flying around in company jets spending big time money for absolutely useless things by the millions for their own convenience but not to be hold responsible when screwing up in this extremes can not be tolerated at all. Government acts far to soft on their follow boys as we have obviously a 2 class legal system - that comfort should be changed but as I see the candidates Obama (or rather his sponsors ) choose I do not think anything but rhetoric will change. Geithner underpays taxes for years is just a little no go situation besides the fact that he as the NY FED governor was responsible in overseeing banks which he completely failed to do. Why is such a man nominated is clear from the lobyists perspective but he will and does not serve the interests of the people.

By Alan Katz, Jon Menon and Vernon Silver

Jan. 15 (Bloomberg) -- HSBC Holdings Plc and UBS AG may be liable for as much as $3.2 billion of losses linked to Bernard Madoff in a dispute over the duties of financial custodians at funds in Luxembourg and Ireland.

At stake is the image of the European fund industry, French Finance Minister Christine Lagarde wrote in a Jan. 12 letter to the European Commission and Luxembourg Prime Minister Jean- Claude Juncker. European funds’ assets grew 59 percent to 6.8 trillion euros ($9 trillion) over the past six years, partly because rules protecting investors made them attractive.

“If they aren’t required to pay the money, then investor protection doesn’t mean anything and people might as well just invest in offshore funds,” said Isabelle Wekstein-Steg, a lawyer at Wan Avocats in Paris who is representing 10 French retail investors and two institutions that face Madoff-related losses at Luxembourg funds. “UBS didn’t do its job of knowing at all times where the assets were, and the same with HSBC.”

Custodians are charged with oversight of funds and they manage cash inflows and payments to investors. Those looking to recoup money would have to prove the banks failed to fulfill their duties, according to nine lawyers surveyed by Bloomberg News. HSBC has said it isn’t liable and UBS declined to comment on the issue.

HSBC and UBS’s custodian roles for the Luxembourg funds are limited because they were set up by investors specifically looking to place money with Madoff, said Paul Mousel, co-head of the financial services practice at law firm Arendt & Medernach in Luxembourg. He’s representing both banks.

HSBC and Santander

HSBC, UBS May Be Liable on Madoff as Fund Custodians