This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7783236.stm

The article has changed 17 times. There is an RSS feed of changes available.

Version 5 Version 6
Banks hit worldwide by US fraud Banks hit worldwide by US fraud
(about 1 hour later)
Some of the world's biggest banks have revealed that they are victims of a fraud which has lost $50bn (£33bn).Some of the world's biggest banks have revealed that they are victims of a fraud which has lost $50bn (£33bn).
Bernard Madoff has been charged with fraud in what is being described as one of the biggest-ever such cases.Bernard Madoff has been charged with fraud in what is being described as one of the biggest-ever such cases.
Among the banks which have been affected are Britain's RBS, Spain's Santander and France's BNP Paribas. Among the banks which have been hit are Britain's HSBC and RBS, Spain's Santander and France's BNP Paribas.
One of the City's best-known fund managers has criticised US financial regulators for failing to detect the alleged fraud.One of the City's best-known fund managers has criticised US financial regulators for failing to detect the alleged fraud.
Meanwhile the Serious Fraud Office (SFO) has called on workers, former staff and shareholdto come forward with evidence of any corporate wrongdoing in the wake of the credit crunch.
'Financial scandal''Financial scandal'
Nicola Horlick, boss of Bramdean investments, said US regulators had "fallen down on the job". Nicola Horlick, boss of Bramdean investments, told the BBC: "I think now it is very difficult for people to invest in things that are meant to be regulated in America, because they have fallen down on the job."
Mrs Horlick told the BBC: "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."
FROM THE TODAY PROGRAMME More from Today programmeFROM THE TODAY PROGRAMME More from Today programme
"This is the biggest financial scandal, probably in the history of the markets - $50bn is a huge amount of money," she said."This is the biggest financial scandal, probably in the history of the markets - $50bn is a huge amount of money," she said.
Banks and financial institutions across the world had investments with Bernard Madoff:
    class="bulletList">
  • The Royal Bank of Scotland said on Monday it could potentially lose about £400m from the alleged fraud, if all its investments had to be written off
  • Spain's largest bank, Santander, which also owns the UK High Street banks Abbey, Alliance & Leicester and Bradford & Bingley, said one of its funds had $3.1bn invested in the firm run by Bernard Madoff
  • France's BNP Paribas estimated its exposure to be more than $460m
  • The French bank, Natixis, a subsidiary of Caisse d'Epargne and Banque Populaire, said it could potentially lose up to 450m euros (£402m; $605m)
  • Spain's second-largest bank, BBVA, said it could potentially lose 300m euros ($400m)
  • One of the world's biggest investment groups, Man, said it had invested about $360m through its RMF institutional fund of funds business, representing 0.5% of its total funds
  • Japanese bank Nomura said its exposure was relatively small, at about 27.5bn yen (£201m), and added: "We regard this as non-material, considering our capital base."
Banks and financial institutions across the world had investments with Bernard Madoff, but not all have yet confirmed what their potential losses might be.
'Systemic failures' Among the largest potential losers so far is Spain's largest bank, Santander, which also owns the UK High Street banks Abbey, Alliance & Leicester and Bradford & Bingley.
Mrs Horlick said 9% of Bramdean's funds were invested with Mr Madoff, but she said even if the money was written off, the fund involved would be down just 4%. WHAT IS A PONZI SCHEME? A fraudulent investment scheme paying investors from money paid in by other investors rather than real profitsNamed after Charles Ponzi who notoriously used the technique in the United States in 1903
The collapse of Madoff is likely to accelerate the disappearance of hedge funds Robert Peston class="" href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/">Read Robert Peston's blog One of its funds had $3.1bn invested in the firm run by Bernard Madoff
Britain's HSBC said it had investments of about $1bn which could be affected.
Royal Bank of Scotland said it could potentially lose about £400m ($601m) if all its investments had to be written off.
The French bank, Natixis, a subsidiary of Caisse d'Epargne and Banque Populaire, said it could potentially lose up to 450m euros (£402m; $605m).
One of the world's biggest investment groups, Man, said it had invested about $360m through its RMF institutional fund of funds business, representing 0.5% of its total funds
'Systemic failure'
Meanwhile, some of the biggest private losers seem to have been members of the Palm Beach country club, where many of Mr Madoff's wealthy clients were recruited.
MAJOR POTENTIAL LOSSES Santander, Spain - $3.1bnHSBC, UK - $1bnNatixis, France - $605mRoyal Bank of Scotland, UK - $601mBNP Paribas, France - $460mBBVA, Spain - $400mMan Group, UK - $360mReichmuth & Co, Switzerland - $325mNomura, Japan - $303m According to some reports, the list of prominent victims include a New Jersey Senator, the owners of the New York Mets and the charities run by film director Stephen Spielberg and Nobel Prize winning writer Elie Wiesel.
Mrs Horlick said 9% of Bramdean's own funds were invested with Mr Madoff, but that even if the money was written off, the fund involved would be down just 4%.
"I just want to make it clear to investors that even after this, they they would have done extremely well, relative to anything else they could have invested in," she said."I just want to make it clear to investors that even after this, they they would have done extremely well, relative to anything else they could have invested in," she said.
In a statement, Bramdean said: "It is astonishing that this apparent fraud seems to have been continuing for so long, possibly for decades, while investors have continued to invest more money into the Madoff funds in good faith.Nicola Horlick has heavily criticised the performance of financial regulators In a statement, Bramdean said: ""The allegations made appear to point to a systemic failure of the regulatory and securities markets regime in the US."
"The allegations made appear to point to a systemic failure of the regulatory and securities markets regime in the US."
However, some argued that the fund managers should themselves have done more.However, some argued that the fund managers should themselves have done more.
"City figures cannot call for light touch regulation yet at the same time complain that regulators missed risks that the industry failed to spot" said Simon Morris, a partner with City law firm CMS Cameron McKenna. "City figures cannot call for light touch regulation yet at the same time complain that regulators missed risks that the industry failed to spot," said Simon Morris, a partner with City law firm CMS Cameron McKenna.
"It's the unequivocal job of the fund manager to check out the bona fides of whoever they chose to pass their customers' money onto," he said. The collapse of Madoff is likely to accelerate the disappearance of hedge funds Robert Peston class="" href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/">Read Robert Peston's blog "It's the unequivocal job of the fund manager to check out the bona fides of whoever they chose to pass their customers' money onto," he said.
Correspondents say the case is likely to fuel uncertainty about the entire hedge fund industry.Correspondents say the case is likely to fuel uncertainty about the entire hedge fund industry.
Meanwhile one of the City's watchdogs, the Serious Fraud Office (SFO) called on whistleblowers to come forward with evidence of corporate wrongdoing in the wake of the credit crunch.
The Serious Fraud Office said it wanted workers, former staff and shareholders to step up with information over suspected fraud in the current financial turmoil.
Director Richard Alderman said: "Our objective is to ensure that we can bring offenders to justice as quickly as possible."
High returns promised
US prosecutors say Mr Madoff, a former head of the Nasdaq stock market, masterminded a fraud of massive proportions through his hedge fund and investment advisory business.US prosecutors say Mr Madoff, a former head of the Nasdaq stock market, masterminded a fraud of massive proportions through his hedge fund and investment advisory business.
Mr Madoff is alleged to have used money from new investors to pay off existing investors in the fund.Mr Madoff is alleged to have used money from new investors to pay off existing investors in the fund.
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.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.
High returns promised
Mr Madoff founded Bernard L Madoff Investment Securities in 1960, but also ran a separate hedge fund business.Mr Madoff founded Bernard L Madoff Investment Securities in 1960, but also ran a separate hedge fund business.
According to the US Attorney's criminal complaint filed in court, Mr Madoff told at least three employees on Wednesday that the hedge fund business - which served up to 25 clients and had $17.1bn under management - was a fraud and had been insolvent for years.According to the US Attorney's criminal complaint filed in court, Mr Madoff told at least three employees on Wednesday that the hedge fund business - which served up to 25 clients and had $17.1bn under management - was a fraud and had been insolvent for years.
He said he was "finished", that he had "absolutely nothing" and "it's all just one big lie", and that it was "basically, a giant Ponzi scheme", the complaint said.He said he was "finished", that he had "absolutely nothing" and "it's all just one big lie", and that it was "basically, a giant Ponzi scheme", the complaint said.
Under a Ponzi scheme, which is similar to pyramid schemes, investors are promised very high returns on their investment, while in reality, early investors are paid with money collected from later investors.
If found guilty, US prosecutors say he could face up to 20 years in prison and a fine of up to $5m.If found guilty, US prosecutors say he could face up to 20 years in prison and a fine of up to $5m.
Are you worried about your investments? Send us your comments on this story using the form below:Are you worried about your investments? Send us your comments on this story using the form below:
In most cases a selection of your comments will be published, displaying your name and location unless you state otherwise in the box below.In most cases a selection of your comments will be published, displaying your name and location unless you state otherwise in the box below.
Name
 Name