HSBC faces $1bn hit from Bernie Madoff Ponzi scheme tussle

Core Viewpoint - HSBC is facing a financial impact of $1.1 billion due to a legal ruling related to the Bernie Madoff Ponzi scheme, leading to a decline in its share price [1][2][4]. Financial Impact - HSBC announced it would set aside $1.1 billion in its third quarter results to cover the costs associated with the lawsuit [1][4]. - The lawsuit was initiated by Herald Fund SPC, which claimed losses from investments in Madoff's funds, amounting to $2.5 billion in securities and cash plus interest, or damages of $5.6 billion plus interest [8]. Legal Proceedings - The Luxembourg Court of Cassation rejected HSBC Securities Services Luxembourg's appeal regarding the restitution claim, prompting HSBC to set aside the financial impact [5][6]. - HSBC plans to pursue a second appeal before the Luxembourg Court of Appeal to contest the amount it may be required to pay [7]. Market Reaction - Following the announcement, HSBC's shares fell by as much as 2.4% on the FTSE 100 [1]. - Despite the recent decline, HSBC's shares have increased nearly 27% year-to-date due to a significant restructuring effort by its CEO [9]. Additional Context - HSBC is also dealing with the financial implications of a $13.6 billion deal to take its Hong Kong-listed business, Hang Seng Bank, private, which has led to the suspension of share buybacks for the next three quarters [8][9].