HSBC Holdings PlcÂs Luxembourg unit should compensate investors only if a local court finds the bank breached its custodial duties over a fund that placed assets with Bernard Madoff, the countryÂs financial regulator said.
HSBC says the bank has a good defense and will not pay unless ordered by the court. We all know HSBC will not pay then, and will appeal for years. HSBC is like AIG which took money from counterparties and insured anything. AIG was bailed out by the US Government instead of being allowed to collapse.
HSBC clearly did not think the Madoff affair would explode in the bank’s face. Investors in France, Ireland and Luxembourg, the worldÂs second-largest mutual fund market after the U.S., are suing custodians including HSBC, seeking the repayment of billions of dollars.
HSBC is trying to find the best way to get around responsibility for what the bank thought was free easy money. The decision whether HSBCÂs unit Âcommitted a civil tort which would oblige it to contribute, together with all other persons held liableÂ to pay damages Âfalls exclusively to the courts and tribunals,Â the regulator said.