It’s been so long they’ve already made a movie and a mini-series. But nearly a decade after Bernard Madoff’s Ponzi scheme was discovered, many European investors are still waiting for the resolution of endless lawsuits stalled in Luxembourg courts.
The European Union’s top court was asked at a hearing last week to rule on its first Madoff-related dispute -- a fund executive’s fight for access to confidential files that he says may vindicate him held by Luxembourg’s financial regulator, including ones concerning UBS Group AG.
The case, referred to the EU Court of Justice by a local tribunal, is one of hundreds that have been trickling through the tiny country, the second-biggest fund market after the U.S. While it raises an important question on the conflicts between regulatory and criminal probes, the case is representative of how protracted European Madoff litigation has become.
“We are at a complete standstill” and it’s been like that for years, said Francois Brouxel, a lawyer who has represented investors seeking to find those liable for losses in Madoff funds. “What more is there to add?”
Luxembourg’s role as a hub for investment funds has put it at the center of most Madoff litigation in Europe. At least 17 funds, including Access International Advisors’ LuxAlpha Sicav-American Selection and Luxembourg Investment Fund, were forced to suspend redemptions after Madoff’s arrest in December 2008. Dozens of lawsuits filed in the Grand Duchy against the custodians overseeing the funds, including UBS, have been stuck for years.
The EU case deals with an executive at LuxAlpha, the Luxembourg fund that has been most closely linked to Madoff.
LuxAlpha invested 95 percent of its money with Madoff and had $1.4 billion in net assets a month before the Ponzi scheme was discovered. Thierry Magon de La Villehuchet, chief executive officer of Access International, which managed LuxAlpha, committed suicide in his New York office 12 days after Madoff’s arrest.
Pierre Delandmeter, a lawyer and former board member of LuxAlpha and its management company, is fighting to get documents from the country’s financial regulator, CSSF, about its Madoff probe. In particular, he is seeking a document UBS sent to the CSSF.
UBS, which oversaw investor deposits as the fund’s custodian, the regulator and former LuxAlpha directors are seeking to block the request.
Scapegoat