Fraud Overview - Spanish authorities dismantled a €260 million (~$300 million) Ponzi scheme led by "CryptoSpain" [1] - The scheme, operated through Madeira Invest Club, promised 20% annual returns on crypto, gold, luxury cars, whiskey, and real estate [2] - Funds were allegedly used to purchase digital art for resale, but were actually used to pay earlier investors [2] Investigation and Scope - The investigation, Operation PONEI, was led by Spain's Civil Guard and resulted in the arrest of Álvaro Romillo Castillo [1] - Investigators uncovered shell companies and bank accounts in at least eight countries, including Cyprus and Madeira [2] - Funds were moved through offshore entities and crypto mixing services to conceal their origin [3] - Authorities estimate over 3,000 victims across Spain, Portugal, Italy, Germany, and Latin America were defrauded [3] Financial Impact and Losses - The average loss per investor was €80,000, with some losing over €1 million [4] - Police seized luxury assets, including a Ferrari and a yacht, purchased with stolen funds [4] Legal and Regulatory Actions - Europol assisted in tracing transactions to crypto exchanges in Estonia and Panama [4] - Castillo has been denied bail due to flight risk and faces up to 15 years in prison [4]

🚨UPDATE: SPAIN’S CIVIL GUARD ARRESTS “CRYPTOSPAIN,” HEAD OF MADEIRA INVEST CLUB, FOR A €260M CRYPTO PONZI THAT DUPED 3,000 INVESTORS ...

Spain’s Civil Guard arrested “CryptoSpain,” head of Madeira Invest Club, for running a €260 million crypto-linked Ponzi scheme that lured over 3,000 victims with “guaranteed returns” since 2023. Investigators found no real investments, only new funds used to repay earlier investors. https://t.co/AlGbPC7fi3 ...

Core Viewpoint - HSBC has indicated that it may take years to resolve a lawsuit related to the Bernard Madoff Ponzi scheme, which has significantly impacted the bank's profits, leading to a 14% decline in pre-tax profits for the third quarter of 2023 [1][4]. Financial Impact - HSBC's pre-tax profits fell to $7.3 billion for the three months ending September 30, down from $8.5 billion in the same period last year, primarily due to a $1.1 billion provision for the Madoff lawsuit [4]. - The bank's operating costs increased by 24% to $10 billion, influenced by the Madoff provision and restructuring costs related to layoffs [4]. - Despite these challenges, HSBC reported a 15% rise in net interest income to $8.8 billion and a 12% increase in net fee income to $3.5 billion [6]. Legal Proceedings - HSBC has set aside a $1.1 billion provision to address the lawsuit from investors affected by the Madoff scheme, which is the largest Ponzi scheme in history, involving approximately $65 billion in fraud [2][3]. - The bank's CFO, Pam Kaur, stated that the timeline for a settlement is uncertain, potentially taking months or even years, and emphasized that the $1.1 billion figure is based on careful judgment and legal advice [3]. - HSBC plans to appeal a court decision regarding its Luxembourg arm and may dispute the final amount in future proceedings if necessary [3]. Strategic Focus - HSBC's CEO, Georges Elhedery, highlighted the bank's commitment to becoming a more agile and focused institution, aiming to address customer needs amid changing economic conditions [7].

The Bernie Madoff investment scandal was uncovered in 2008 but it is still reverberating on banks’ balance sheets today. HSBC said Monday that it has set aside $1.1 billion to cover litigation by investors who lost money in the Ponzi scheme. One of the bank’s European businesses was in charge of looking after money and administration for funds that invested with Madoff’s company. One of those funds, Herald Fund, sued it in 2009 after the scandal came to light, saying the bank should repay billions of doll ...

HSBC is booking a provision of $1.1 billion for a lawsuit in Luxembourg related to Bernard Madoff’s multibillion-dollar Ponzi scheme, one of the largest financial frauds in American history https://t.co/MTrTvl7XLc ...

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].

Core Viewpoint - HSBC Holdings will record a US$1.1 billion provision in its third-quarter earnings due to uncertainties surrounding payouts in lawsuits related to the Bernard Madoff fraud case [1][4]. Financial Impact - The provision will affect the group's common-equity tier one capital ratio by approximately 15 basis points, which measures the bank's core capital against its risk-weighted assets [2]. - This provision is classified as a "material notable item" and will not influence the full-year rate of return excluding notable items in 2025 or any dividend payouts [2]. Legal Context - The provision is linked to a 2009 lawsuit by Herald Fund SPC, which is seeking restitution of securities and cash valued at US$2.5 billion, with total damages claimed at US$5.6 billion due to losses from the Madoff Investment Securities collapse [4]. - HSBC's decision to make the provision followed a Luxembourg Court ruling that denied HSBC Securities Services Luxembourg's appeal regarding Herald's claims for securities restitution, although it allowed an appeal for the cash-restitution claim [5]. Ongoing Legal Proceedings - HSBC Securities Services Luxembourg plans to pursue a second appeal before the Luxembourg Court of Appeal and will contest the payment amount if the second appeal is unsuccessful [5]. - The case is part of a series of lawsuits against various HSBC entities stemming from the Madoff fraud, with HSBC having provided custodial and administration services to non-US funds that invested approximately US$8.4 billion with Madoff Securities as of November 2008 [6]. Future Considerations - HSBC acknowledged that the eventual financial impact could vary significantly due to the ongoing second appeal and the complexities involved in determining the restitution amount [7].

By Rishav Chatterjee and Selena Li (Reuters) -HSBC Holdings said on Monday it will book a $1.1 billion provision in its third-quarter results after losing part of an appeal in a long-running lawsuit tied to Bernard Madoff's Ponzi scheme. HSBC acted as a service provider to several funds that invested with Bernard L. Madoff Investment Securities LLC. Herald Fund SPC sued HSBC's Luxembourg unit in 2009 seeking restitution of assets it said were lost in the fraud. Last Friday, the Luxembourg Court of Cassa ...

Core Viewpoint - HSBC Holdings will recognize a provision of $1.1 billion in its third-quarter results due to a Luxembourg court ruling related to the Bernard Madoff investment fraud [1][2]. Group 1: Legal Proceedings - The Luxembourg Court of Cassation denied HSBC Securities Services Luxembourg's appeal regarding the restitution of securities claimed by Herald Fund SPC but accepted an appeal on a separate cash restitution claim [2]. - HSBC will pursue a second appeal before the Luxembourg Court of Appeal, and if unsuccessful, it will contest the amount to be paid in subsequent proceedings [2]. Group 2: Financial Impact - The provision of $1.1 billion is estimated to impact HSBC's common equity tier 1 (CET1) capital ratio by around 15 basis points [3]. - This provision will be classified as a "material notable item" and will not affect the full-year return on tangible equity excluding notable items or the dividend payout [3]. Group 3: Future Considerations - Given the pending appeal and complexities in calculating the restitution amount, the eventual financial impact could differ significantly from the current estimate [4]. - The case originates from Herald Fund SPC's claim for restitution of securities and cash lost in the collapse of Bernard L. Madoff Investment Securities LLC, which was involved in one of the largest Ponzi schemes in history [4].