Banco Santander is set to become the first institution to compensate its clients who lost money with Bernie Madoff. So far, no bank or feeder fund has done this, but this could raise the pressure to do so:
WSJ: The offer, which does not apply to institutional investors, comes as Santander customers filed the first-class action lawsuit against the bank, accusing it and other defendants of gross negligence and breach of fiduciary duty.
Clients in Latin America have been quietly approached by Santander representatives with an offer to return their original investments in the form of preferred stock in the Spanish bank. Under the terms of the offer document, a copy of which was reviewed by The Wall Street Journal, the preferred shares will be issued by Santander and pay a 2% rate of annual interest.
Not every feeder will be able to do something like this. The most egregious ones won’t have any money left over to pay victims. But a large bank like Banco Santander can afford to do this, and it’s the right thing to do given the bright red flags the bank ought to have seen.
So, HSBC, UBP, UBS? Are you going to make your clients drag your to court?