The putative Class seeks a recovery of billions of dollars in damages. The complaint's principal allegation is that Defendants were negligent and reckless in investing substantially all of the assets of the Strategic US Equity Fund with Bernard L. Madoff ("Madoff") and Bernard L. Madoff Investment Securities LLC ("BMIS") without conducting reasonable and adequate due diligence.
Defendants include (i) Banco Santander, S.A.; (ii) Banco Santander International; (iii) Optimal Investment Services, S.A.; (iv) PricewaterhouseCoopers (Ireland); (v) HSBC Securities Services (Ireland) Ltd.; (vi) HSBC Institutional Trust Services (Ireland) Ltd.; (vii) Manuel Echeverría Falla; (viii) Anthony L.M. InderRieden; and (ix) Brian Wilkinson.
As alleged in the complaint, Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing materially false and misleading statements about their due diligence and oversight of Madoff and BMIS. Among the allegedly false statements made in the Explanatory Memorandum dated January 7, 2008, that was distributed to investors, was the assurance that Optimal "bases its investment decisions on a careful analysis of many investment managers." The complaint further asserts that had the Defendants conducted a reasonably "careful analysis" of Madoff and BMIS, Defendants would not have lost billions of dollars belonging to the investors.
FOLLOW UP
Santander has since offered to reimburse the 1.38 billion euros (1.82 billion dollars) which its private banking clients lost in the alleged fraud by US broker Bernard Madoff in the first such move by a financial institution.
"Santander is offering its private clients the chance to recover 100 percent of the money which they invested," said a bank spokesman, adding the offer would not apply to institutional investors. The offer means private clients will only lose the interest they were supposed to have accrued through Madoff funds. Santander, the eurozone's largest bank by market capitalisation, is one of the companies most exposed in the 50-billion-dollar pyramid scheme Madoff is accused of having run. In December the bank announced its investment fund Optimal had a total exposure of 2.33 billion euros to the Madoff scheme while Santander itself was exposed only to the tune of 17 million euros. Santander counts some of Spain's richest people as its private clients, as well as a high number of Latin American investors, especially from Argentina, Brazil and Mexico, according to media reports.
