Two groups of Dubai-based investors are suing Standard Chartered for around $10 million in Singapore, claiming they lost money after investing in a feeder fund linked to hedge fund-operator Bernard Madoff.
The investors say that the feeder fund was recommended by American Express Bank (AEB), which Standard Chartered acquired in 2008.
Feeder funds gather money from investors and channel the money into larger funds.
More than to 95 percent of the feeder fund, Fairfield Sentry, was parked with Mr. Madoff, who is currently serving a 150-year jail sentence for defrauding investors through a Ponzi scheme.
The Dubai-based investors maintained accounts in AEB and claim that the bank “failed to act with reasonable care and skill in matters relating to the plaintiff’s investments,” in writs filed with the Singapore High Court.
Meanwhile, Standard Chartered has denied liability. Officials with the bank say the plaintiffs are experienced investors who had signed client agreements stating the bank had no duty or obligation to monitor their transactions and assets.
A United States federal bankruptcy judge ruled last week that investors in feeder funds who lost money in Bernard Madoff’s Ponzi scheme do not qualify as customers of Mr. Madoff.
Mr. Madoff’s scheme is believed by federal investigators to have begun in the 1970s and defrauded thousands of investors to the tune of billions of dollars.
(Eman El-Shenawi, a writer at Al Arabiya English, can be reached at: firstname.lastname@example.org.)