Irish-based firm among $50bn fraud victims

DUBLIN-BASED Pioneer Alternative Investments is among the victims of a $50 billion (€37.4 billion) fraud allegedly perpetrated by Bernard Madoff, a prominent Wall Street trader who was arrested on Thursday.

Investors around the world were yesterday rushing to assess potential losses from the multibillion-dollar scheme, in what could be the biggest fraud yet on Wall Street.

Mr Madoff, founder of Bernard L Madoff Investment Securities and a former chairman of the Nasdaq stock market, was released on $10 million bail on Thursday after prosecutors said he told senior employees - including his sons - that his operations were "all just one big lie" and "basically, a giant Ponzi scheme".

The US Securities and Exchange Commission (SEC) was yesterday due to seek emergency relief for investors - including an asset freeze - after Mr Madoff was charged with a securities fraud that could have produced losses of what he believed amounted to "approximately $50 billion", according to federal prosecutors.

Pioneer Alternative Investments ran a fund that only invested in Madoff, filings show.

Almost all of the $280 million Primeo Select Fund was invested with Madoff Securities, according to a factsheet on Pioneer's website.

Shwetha Redy, a spokeswoman in Dublin for Pioneer, declined to comment.

Dublin is the investment hub of Pioneer Alternative Investments, which is the alternative investment management arm of Pioneer Investments, a global group that had €210 billion in assets under management as of April 2008.

The alternative investment arm, which was formed in 1999 and runs a number of "funds of hedge funds", had €5.3 billion under management as of April, according to its website.

The group is a subsidiary of UniCredito.

In London, Nicola Horlick's Bramdean Alternatives revealed yesterday that its listed investment fund had almost one-tenth of its investments exposed to the New York broker.

Others who invested with Mr Madoff included US-based Tremont, the fund of hedge funds, which had more than $1 billion invested, Switzerland's Union Bancaire Privée, London's Man Group and Spanish bank Santander's Optimal division.

According to regulatory filings in January, Mr Madoff's investment advisory business served 11 to 25 clients and had about $17.1 billion under management.

It was unclear whether the loss estimated by Mr Madoff was correct. SEC examiners are on site poring through documents.

According to the criminal complaint, Mr Madoff told a senior employee around the first week of this month that there had been requests from clients for about $7 billion in redemptions - which he was struggling to meet. - (Additional reporting: Financial Times service, Bloomberg)