Top 10 Madoff Losers

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Most people who lost money to Bernard Madoff’s “stunning investment fraud” a few weeks ago did not know who he was; he protected his identity through a set of secrecy veils allowing construction of likely the largest Ponzi scheme in history, entirely undetected – but, who lost the most money?

Banks and financial institutions around Europe show significant hits, revealing billions of dollars of exposure to Madoff’s $50 billion Ponzi scheme. Significant publications such as Time and other magazines suggest that the main salesmen of Madoff’s “investment” fund were likely close friends, and not licensed securities professionals, who had been given the strictest of orders to avoid using the Madoff name.

The scam, a type of Ponzi scheme, where investors were paid off with future investors investments, posed as a legitimate investment fund operated by Bernard Madoff’s company, Madoff Investment Securities.

  1. The Royal Bank of Scotland
    Royal Bank of Scotland – $600 million US. Possibly acquired from the write-down deal with ABN Amro, last year, the Royal Bank of Scotland announced Monday that they would be ready to absorb losses of £400 million from funds stored in Madoff’s “fund.”
  2. UBP
    Union Bancaire Privée – $1.1 billion. Swiss private asset management company based in Geneva, UBP says that their exposure to Madoff’s investment game sits at approximately $1.1 billion US. UBP defends their decision to invest in Madoff’s firm, suggesting that they firmly believed he was front-running trades and the SEC’s lack of enforcement is to blame.
  3. Fortis Bank
    Fortis Bank – $1.4 billion. Strong Dutch bank, Fortis, a company that has been more/less scraped for parts in the banking crisis of this year and is largely owned by the Dutch government claims to have no direct exposure to Madoff Investment Securities or the fund, but rather, holds positions in many funds which they believe could be entirely lost at this point. Sources say exposure to ABN Amro investments may be involved in this fault, as with the Royal Bank of Scotland.
  4. Access International – $1.4 billion. Hedge fund Access International held a large portion of it’s value in Madoff Investments. Rene-Thierry Magon de la Villehuchet, 65, founder of the French fund, was found to have committed suicide on December 23rd, many suggest after the pressures of losing this much money pushed him overboard.
  5. HSBC
    HSBC – $1.5 billion US. HSBC, the “world’s largest bank” has potential exposure of $1 billion in direct investment (mostly in hedge funds), with an extra $500 million in clients losses. Contractually, if the SEC or federal government is to recover any of Madoff’s $50 billion dollar scam, HSBC is to be paid towards their losses before their clients see any of the money.
  6. GMAC Chairman, J. Ezra Merkin – $1.8 billion. Merkin, Chairman of the now bank holding company, GMAC Financial Services, the financial arm of the struggling General Motors, claims he had significant direct and indirect exposure to Madoff’s fund. Furthermore, Merkin is being sued / targeted in a number of jurisdictions for losing investors money; as a respected financial guru and manager of various Jewish institutions’ investment funds, including New York’s Yeshiva University, Merkin’s friendship with Bernard Madoff makes him a prime target for “funny business” lawsuits.
  7. Kingate Management Ltd. – $2.8 billion
  8. banco-santanderSantander Bank – $3.1 billion. Banco Santander, based in Santander, Spain, is suffering large expected losses from the collapse of Bernard’s fund. Whether exposure is direct or through loans and hedge funds is unclear at this point.
  9. Tremont Capital – $3.3 billion.
  10. fgg_index_pic1Fairfield Greenwich Group – $7.3 billion. By far the biggest loser of all, Fairfield Greenwich Group staked 100% of it’s Fairfield Sentry assets with Madoff’s investment company. The company’s partners, Andres Piedrahita, Jeffrey Tucker and Walter Noel are under attack in a class action lawsuit on behalf of investors, accused of the charges: breach of fiduciary duty, financial negligence and unjust enrichment. We can expect to see a set of further Madoff-induced financial negligence charges in the coming months, as such, the precedent that this large scale loss sets will be very important to investors.
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3 Responses to “Top 10 Madoff Losers” (click to open/close)

  1. gilberto milani says:
    January 12, 2009 at 9:18 AM

    Incredible that so many banks and funds invested in to the Madoff Ponzi scheme. I fail to understand how Madoff’s investments were not exposed by the SEC which is responsible for failing to address the situation. Madoff was a crook and should be sent to prison, but the problem lies in to discovering crooks before they destroy our economy.

  2. Trend Trading System says:
    June 29, 2009 at 9:39 AM

    It’s incredible that these large banks could be so foolish with so much money!

  3. Michael Galbraith says:
    December 28, 2009 at 5:44 PM

    HAHAH… good. They all deserve it.

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