RPT-UPDATE 1-Madoff trustee sues HSBC for $9 bln in U.S. court

(Repeats Dec. 5 story with no changes to text)

* Asserts HSBC enabled international Madoff network

* Cites $2.3 bln in purported fraudulent transfers

* Lawsuit also includes European feeder funds, managers
(Adds quote from statement, background on lawsuits)

By Grant McCool

NEW YORK, Dec 5 (BestGrowthStock) – The lawyer searching the globe
to recover money for defrauded investors of convicted swindler
Bernard Madoff sued HSBC (HSBA.L: ) for $9 billion on Sunday,
accusing the bank of enabling the largest financial fraud in
history.

Court-appointed trustee Irving Picard accused HSBC of
aiding the Madoff fraud “through the creation, marketing and
support of an international network of a dozen feeder funds
based in Europe, the Caribbean, and Central America,” a
statement by Picard said.

The lawsuit in U.S. Bankruptcy Court in New York also
identifies “feeder funds,” management companies and service
providers of those funds. They include Sonja Kohn, Genevalor,
Mario Benbassat and his sons, Albert and Stephane, Bank Medici
and UniCredit (CRDI.MI: ).

HSBC spokesman Patrick McGuinness declined to comment. HSBC
(0005.HK: ) shares were up 0.7 percent in early Hong Kong trading
on Monday, in a broader market that was up (.HSI: ) 0.9 percent.

Madoff, 72, is serving a 150-year prison sentence after
pleading guilty in March 2009 to running a decades long
investment fraud of up to $65 billion, an unprecedented scheme
that shook investor confidence in market regulators. Thousands
of investors, large and small, lost money worldwide.

Sunday’s lawsuit seeks to recover at least $9 billion
“based on theories of contribution to Madoff’s scheme; aiding
and abetting Madoff’s fraud; unjust enrichment in the form of
millions of dollars; and over $2.3 billion in fraudulent
transfers,” the trustee said.

The lawsuit contains 24 counts of alleged financial fraud
and misconduct by HSBC.

It said that HSBC twice retained KPMG to identify concerns
with the Madoff firm and KPMG twice reported serious risks
already known to HSBC.

RED FLAGS

The trustee, appointed to recoup investor money lost to
Madoff, on Thursday sued JPMorgan Chase & Co (JPM.N: ) for $6.4
billion, accusing his primary banker of ignoring warning signs
of his massive fraud. He had previously sued Swiss bank UBS AG
(UBSN.VX: ) for $2 billion.

Picard’s complaint against HSBC and the other defendants
also said they ignored red flags raised over the years about
the legitimacy of Bernard L. Madoff Investment Securities LLC
in New York.

“Had HSBC and the defendants reacted appropriately to
warnings and other obvious badges of fraud outlined in the
complaint, the Madoff Ponzi scheme would have collapsed years,
billions of dollars, and countless victims sooner,” Picard’s
statement said.

A Ponzi scheme is one in which early investors are paid
with the money of new clients.

Picard has filed hundreds of lawsuits in the past week in
addition to other lawsuits over the past year. The trustee must
file such lawsuits to recover money by the two-year anniversary
of Madoff’s arrest and his firm’s demise on Dec. 11, 2008.

So far, Picard’s team says it has recovered $1.5 billion.

Many of Picard’s lawsuits seek money from former Madoff
clients he considers “net winners” for having withdrawn more
from the firm than they invested.

The case is Picard v. HSBC et al, U.S. Bankruptcy Court,
Southern District of New York, No. 09-01364 (amended)
(Editing by Muralikumar Anantharaman and Robert MacMillan)

RPT-UPDATE 1-Madoff trustee sues HSBC for $9 bln in U.S. court