Commission de Surveillance du Secteur Financier, Luxembourg’s financial regulator, accused UBS of “serious failure” yesterday as part of its investigation into investments that funds based in Luxembourg made in Bernard Madoff’s alleged $50 billion Ponzi scheme.
The Times Online reports that the regulator particularly criticized UBS’ weak due diligence with respect to its custodianship of a $1.4 billion fund, Luxalpha, that invested in Madoff’s scheme. It has given UBS three months “to show it has put in place the infrastructure necessary to improve its procedures and structures and to pay compensation.”
UBS denied the accusations, and issued a statement that
Documentation for the fund made it very clear the company was not expected to be responsible for the safekeeping of the assets. The fund documentation contained an explicit waiver to that effect. UBS does not have responsibility to these shareholders for the unfortunate results of the Madoff scandal.