HSBC Holdings PLC will have to wait until July end to find out if a U.S. judge allows the Madoff firm trustee to proceed with a $9 billion lawsuit accusing the bank of enabling the massive fraud.

The bank lawyers argued in Manhattan federal court that the law don’t allow trustee Irving Picard to bring the case of financial fraud and misconduct against HSBC.

From in.news.yahoo.com:

In all, the judge will be making decisions on challenges to five lawsuits filed by the trustee against banks amounting to nearly $100 billion.

Picard, the court-appointed trustee liquidating former financier Bernard Madoff’s firm after the collapse of his multibillion-dollar Ponzi scheme, last December accused HSBC of enabling the fraud. A Ponzi scheme is one in which old clients are paid with the money of new investors.

The trustee’s lawsuit, filed in U.S. Bankruptcy Court in New York, said the bank created, marketed and supported an international network of a dozen feeder funds based in Europe, the Caribbean, and Central America.

Madoff, 73, who was arrested in December 2008 and admitted orchestrating a decades-long fraud, is serving a 150 year-long prison term after pleading guilty to criminal charges in March 2009.

“I am going to spend a lot of time re-reading the papers,” U.S. District Judge Jed Rakoff said at the end of oral arguments. “I will commit to a written decision by the end of July.”

Tags: feeder funds, HSBC

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