UBS AG's Luxembourg unit is being probed by prosecutors over allegations of forgery when it oversaw two funds linked to Bernard Madoff.
“A preliminary investigation by the prosecutor's office is under way,” Henri Eippers, a spokesman for the Luxembourg Court of Justice said by telephone today. “The police already submitted a first report.”
Access International Advisors LLC's LuxAlpha Sicav-American Selection Fund and Luxembourg Investment Fund were among Luxembourg funds forced to suspend customer redemptions after Madoff's December 2008 arrest. As custodian,
UBS's Luxembourg unit was charged with overseeing the funds and managing deposits and payments to investors.
UBS and its local units have been sued for damages and compensation in more than 100 Luxembourg cases by investors who lost millions of dollars through the funds. LuxAlpha, which lost 95 percent of its approximately $1.4 billion in assets, was dissolved four months after Madoff's arrest in December 2008.
“Neither
UBS (Luxembourg) SA nor its employees are subject to any Luxembourg criminal investigation over funds with Madoff- positions,” Dominique Gerster, a spokesman for Zurich-based
UBS, said in an e-mailed statement. The bank is aware that people “including current
UBS employees” will be invited to testify as part of a preliminary investigation over the funds.
A
UBS spokesman in the U.S. later stated that "statements suggesting
UBS is being probed in Luxembourg for forgery over Madoff-linked funds are incorrect.
UBS is cooperating in a preliminary inquiry into fund disclosure documents."
Eippers said the prosecutors are in the process of gathering more information and will, based on the evidence, decide whether to file a lawsuit against
UBS. He declined to provide details on the forgeries.
The liquidators for LuxAlpha and Luxembourg Investment Funds have sued
UBS and Ernst & Young LLP, the fund's auditor, seeking the return of the lost assets.
“
UBS and E&Y knowingly made false statement to the Luxembourg Supervisory Authority and to the investor community in general about the internal functioning of the Luxalpha fund, more particularly on the existence of the contractual relationship between
UBS and Madoff,” said Edouard Fremault, a senior analyst at Deminor International, which advises about 1,200 investors with losses through Madoff.
Luxalpha and Luxembourg Investment Fund documents made it clear that
UBS wasn't expected to be responsible for the safeguarding the funds' assets, Gerster said in the statement.
Bernard Madoff, 72, pleaded guilty in March 2009 to orchestrating the biggest Ponzi scheme in history. He was sentenced to 150 years in a federal prison in North Carolina.
