By Greg Farrell in New York and Victor Mallet in Madrid
Published: May 26 2009
Spain’s Santander, one of Europe’s biggest banks, has reached a settlement with the trustee seeking to recover money for Bernard Madoff’s victims, agreeing to pay $235m to resolve claims against two of the bank’s hedge funds, managed by its Optimal investment arm.
The deal is the first big settlement for Irving Picard, the trustee, in his quest to get investment partners of Mr Madoff to return money they withdrew from his investment business before he confessed to running a “Ponzi scheme”.
In recent weeks, Mr Picard has filed suit against hedge funds and investors who profited from Mr Madoff’s operation, seeking the return of more than $13bn.
Mr Picard said yesterday that the $235m settlement represented 85 per cent of what he was seeking from Santander’s Optimal unit. Once the payment is made, Mr Picard will have collected $1.225bn to be paid out to victims of Mr Madoff’s fraud.
“I am very pleased that we reached such a favourable settlement with Optimal and that Optimal will pay more than $235 million to resolve the claims against it. We hope that other entities against which we have claims will likewise come forward to settle those claims for the benefit of all of Madoff’s victims,” said Mr Picard.
Under US federal and New York law, investors who withdrew principal or profits in the 90 days before Mr Madoff’s December 11 arrest are especially vulnerable to “clawbacks” of the money.
Santander confirmed the settlement and that the 90-day stipulation was a factor. It said it would issue a more detailed statement later.
Santander, the eurozone’s biggest bank, admitted client losses of up to €2.33bn through Optimal funds as a result of the Madoff case. It sent Rodrigo Echenique, a director of the bank and a close associate of Emilio Botín, the chairman, to meet Mr Madoff in New York on November 27, but it has not said whether the bank withdrew funds from Mr Madoff’s business.