Legal
Luxembourg Regulator Points Finger At UBS In Madoff Case
The
Luxembourg financial regulator, CSSF, has said
UBS did not have enough checks in place to assess the risk of
investing in the Madoff funds.
UBS is currently facing legal action from investors allegedly
advised by
UBS to place funds with Luxalpha, one of several Luxembourg-based
hedge funds that lost at least €1.7 billion ($2.2 billion) in
the Madoff debacle.
CSSF has told
UBS that its
Luxembourg branch did not have enough staff, procedures or
internal rules to comply with local regulations and gave
UBS three months to make changes.
In a statement headed "Affaire Madoff", it said that inadequate due diligence breaches a bank's duty to supervise investments and can consequently constitute a violation of a substantial contractual obligation.
The regulator also said banks are responsible for supervising and following investment funds they promote and must know where and how money is invested and how it can be withdrawn.
