HSBC Sued for $9 Billion Over Due Diligence Failure to Heed Red Flag Warnings of Fraud

"Dec. 6 (Bloomberg) -- HSBC Holdings Plc, Europe’s biggest lender, was sued for $9 billion over claims it aided Bernard Madoff’s fraud through a network of feeder funds in Europe, the Caribbean and Central America.

Irving H. Picard, trustee for the liquidation of Bernard L. Madoff Investment Securities LLC, sued HSBC and a dozen feeder funds in U.S. Bankruptcy Court in Manhattan, Picard said in a statement. The claim is the latest by Picard, who faces a Dec. 11 deadline for suits claiming money from parties alleged to have profited from Madoff’s fraud.

The suit alleges the bank was aware of concerns that Madoff’s investment business was fraudulent and didn’t take steps to protect investors, according to the statement.

“Had HSBC and the defendants reacted appropriately to such warnings and other obvious badges of fraud outlined in the complaint, the Madoff Ponzi scheme would have collapsed years, billions of dollars and countless victims sooner,” Picard said in the statement. "