It may be just a coincidence but another bank with a Singapore connection is bracing for a battle with investors who have lost their money.
UBS says it is not duty-bound to safeguard investor assets in a $1.4 billion fund that channelled money into Bernard Madoff’s alleged $50 billion Ponzi scheme, reports the Financial Times.
The Singapore wealth fund Government of Singapore Investment Corporation invested 11 billion Swiss francs to take a 9 or 9.5 percent in the Swiss bank in December last year.
Singapore’s DBS Bank is also facing angry investors who are demanding compensation for the money they lost investing in collapsed Lehman Brothers products.
DBS is reviewing compensation claims.
UBS, on the other hand, used an agreement that denied it was responsible for the assets – even though its marketing documents claimed it would be, reports Financial Times. It adds:
UBS’ wording of subscription documents for the Luxalpha Sicav, a Luxembourg mutual fund registered for sale across Europe, may set it in conflict with the Luxembourg financial regulator. The Commission de Surveillance du Secteur Financer said: “The provisions of the sales prospectus are binding.”
UBS acted as manager, custodian and administrator of Luxalpha until this year, when Access Management – thought to be part of New York’s Access International Advisors – took over. Four of the six directors of the fund still work for UBS, according to the latest prospectus.
UBS said it could not comment on Luxembourg law, but said: “We established fund of fund structures on clients’ request. Bernard Madoff was not on the bank’s wealth management recommended list as a direct investment option.” Madoff not only acted as manager of assets – never mentioned in the Luxalpha documents – but also insisted on being custodian and broker.
DBS says it is reviewing Lehman Brothers cases and the investors can expect a decision in January, says the Straits Times.
The Monetary Authority of Singapore (MAS) says it is taking steps to ensure that the 10 financial institutions that sold DBS High Notes 5, Lehman Minibond programme notes and Merrill Lynch Jubilee Series 3 LinkEarner notes deal with the investors’ complaints fairly. It adds:
There have been 4,978 formal complaints: 815 for the DBS High Notes 5, 4001 for the Lehman Brothers Minibond programme notes, and 162 for the Merrill Lynch Jubilee Series 3 LinkEarner notes.
Over 90 percent of the complainants have been interviewed and provisional decisions reached on 80 percent of these cases. Most of the banks are resolving complaints according to MAS’ timeline but others need to put in more effort to catch up, says MAS.
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