UBS, Ernst & Young Win Luxembourg Ruling Over Madoff Damages

UBS, Ernst & Young Win Luxembourg Ruling Over Madoff Damages


March 4 (Bloomberg) -- UBS AG and Ernst & Young LLP won a Luxembourg court ruling potentially nullifying hundreds of claims by investors who lost money in funds tied to Bernard Madoff’s fraud.

Luxembourg’s commercial court said in a ruling today concerning 10 test cases that the investors can’t bring individual lawsuits for damages and declared their requests inadmissible.

Investors who lost millions of dollars through Access International Advisors LLC’s LuxAlpha Sicav-American Selection fund filed more than 100 lawsuits against UBS and Ernst & Young for “seriously neglecting” their fund supervisory duties. Luxembourg’s commercial court in April 2009 decided to hear some of the cases to test whether the claims were admissible.

“All I can say at this moment is that we’re considering appealing,” Franck Greff, a lawyer in four of the test cases, said in an interview after the ruling. Pierre Reuter, a lawyer acting for investors in the remaining six test cases declined to immediately comment.

LuxAlpha, which invested 95 percent of its assets with Madoff, said it had $1.4 billion in net assets a month before the former Nasdaq Stock Market chairman’s December 2008 arrest. The fund was dissolved and is being liquidated.

The fund’s liquidators in December filed their own lawsuit against UBS, Ernst & Young, the fund’s manager, Access International Advisors LLC, the fund’s administrators and Luxembourg’s financial regulator. UBS served as the custodian for LuxAlpha, and was responsible for oversight of funds and managed deposits and payments to investors.

Today’s decision could affect similar suits concerning Luxembourg Investment Fund and Herald (Lux) US Absolute Return, which were also dissolved last year after investing with Madoff.

Madoff, 71, pleaded guilty last year in federal court in Manhattan and was sentenced in June to 150 years in prison for using money from new clients to pay earlier investors. He directed a multibillion-dollar Ponzi scheme from his now-defunct New York money-management firm.

source: bloomberg