The list of investors who say they were duped in one of Wall Street’s biggest Ponzi schemes is growing, snaring some of the world’s biggest banking institutions — including several with operations in Connecticut — and hedge funds, the super rich and the famous, pensioners and charities.
Meantime, the town of Fairfield is scrambling to determine whether part of its municipal pension fund has fallen victim to the investment fraud. Town officials say $42 million of its pension investments — nearly 15 percent of the fund’s total value — were entrusted to Bernard Madoff.
Other alleged victims who sunk cash into veteran Wall Street money manager Bernard Madoff’s investment pool include real estate magnate Mortimer Zuckerman, the foundation of Nobel laureate Elie Wiesel, and a charity of movie director Steven Spielberg, according to the Wall Street Journal.
Among the world’s biggest banking institutions, Britain’s HSBC Holdings PLC, which has 10 Connecticut branches; Royal Bank of Scotland Group PLC, parent of Citizens Bank; Spain’s Grupo Santander SA, parent of Sovereign Bank; Man Group PLC, France’s BNP Paribas and Japan’s Nomura Holdings all reported that they had fallen victim to Madoff’s alleged $50 billion Ponzi scheme.
On Friday, representatives from major U.S. banks – Bank of America Corp., Citigroup Inc., PNC Financial Services Group Inc. and Merrill Lynch & Co. – declined to comment on if they had exposure to Madoff’s company. Both BlackRock Inc. and Goldman Sachs Group Inc. said they had no exposure.
The 70-year-old Madoff, well respected in the investment community after serving as chairman of the Nasdaq Stock Market, was arrested Thursday in what prosecutors say was a $50 billion scheme to defraud investors. Some investors claim they’ve been wiped out, while others are still likely to come forward.
“There were a lot of very sophisticated people who were duped, and that happens a great deal when you’ve had somebody decide to be unscrupulous,” said Harvey Pitt, a former chairman of the Securities and Exchange Commission, a regulator in charge of monitoring investment funds like the one Madoff operated.
The extent of the potential damage prompted a leading fund manager in London to lash out at U.S. regulators for failing to detect the fraud earlier.
“I think now it is very difficult for people to invest in things that are meant to be regulated in America, because they haven fallen down in the job,” Nicola Horlick, the manager of Bramdean Alternatives, which has 9 percent of its funds invested in Madoff’s scheme, told the British Broadcasting Corp.
“All through the credit crunch this has been apparent,” Horlick added. “This is the biggest financial scandal, probably, in the history of the markets.” (AP)
