ANOTHER IRISH-BASED investment fund has brought court proceedings here arising from the activities of alleged US fraudster Bernard Madoff.
Fortis Prime Fund Solutions Custodial Services (Ireland) Ltd has brought proceedings to freeze €31.6 million given by it to HSBC Security Services (Ireland) Ltd to administer for the purpose of buying shares through British Virgin Islands-based investment company Defender Ltd.
Fortis, of Park Lane, Spencer Dock, Dublin, claims the investment monies it gave to HSBC, as an administrator, was credited to HSBC bank in London on November 28th last, just days before the arrest of Bernard Madoff by the FBI.
It claims the funds were to be passed on to Defender, described as an “open-ended investment company”, which has as its objective the achievement of long-term capital appreciation through the allocation of assets to a single trader. Fortis said the assets were to be allocated through Bernard L Madoff Investment Securities LLC.
Mr Justice Peter Kelly yesterday granted Fortis an interim order directing HSBC to disclose forthwith the location of the money, made up of $33 million and €6.1 million, and restraining it from disposing or diminishing the value of that money pending further court proceedings. The judge also ordered that Defender Ltd be served with notice of these proceedings in the Virgin Islands.
Two other investment funds, Thema International Fund plc, and AA (Alternative Advantage) plc, both of Fitzwilton House, Wilton Place, Dublin, have already brought an action in the High Court against HSBC Securities Services (Ireland) Ltd and HSBC Institutional Trust Services (Ireland) Ltd, seeking to recover $1.2 billion.
In an affidavit, Fortis director Noel Fahy said the final day for authorising the buying of shares by Defender was November 28th and therefore the funds should not have passed from HSBC to Defender but should have gone into the following dealing period, December.
Following the arrest of Mr Madoff, Defender’s directors had decided to terminate trading agreements with immediate effect and therefore Fortis is entitled to the return of the monies, Mr Fahy said.
Fortis wrote to HSBC seeking their return but was told Fortis’s application to have the money invested was irrevocable. Fortis is claiming its shares could only have been bought from December 1st (a new dealing period) and it was therefore covered by Defender’s cancellation of Madoff-linked funds.
Mr Fahy said he believes the monies are still under the control of HSBC and his company has a real and grave concern that Defender may rely on a request it made to HSBC to transfer the monies to Defender’s account on the day after Madoff’s arrest.
