Phil MeekinView Profile
Some of the world’s wealthiest private and corporate investors are reported to be victims of an alleged $50bn fraud by Wall Street broker Bernard Madoff.
Mr Madoff is alleged to have confessed to a huge Ponzi scheme fraud. This form of fraud is where payments are made to investors out of the money paid in by subsequent investors, rather than from the profit from any real business.
Prosecutors say Mr Madoff, ex-head of the Nasdaq stock market, has described the fraud as “one big lie”.
A federal judge has appointed a receiver to oversee Mr Madoff firm’s assets and customer accounts, while the 70-year-old banker has been released on $10m bail.
Hundreds of people are thought to have invested with Mr Madoff, among them international banks, hedge funds and wealthy private investors. All of which are trying to find out the cost of the alleged fraud.
Bramdean Alternatives, a UK-based asset management company run by Nicola Horlick, saw its share value drop by over 35% after it revealed that nearly 10% of its holding was exposed to the New York broker.
One hedge fund, Fairfield Greenwich Group, said its clients had invested $7.5bn with the firm.
British banks have also been hit with the Royal Bank of Scotland admitting that it stood to lose £400 million. Also, HSBC warned its shareholders that its losses could be $1 billion (£675 million), making it Britain’s largest victim so far.