UBS Accused Of "Grave Breach" Of Oversight On Madoff-Related Funds

Swiss regulator Commission de Surveillance du Secteur Financier ordered UBS to review internal controls at its Luxembourg unit and report within three months, criticizing the bank of a "grave breach" of oversight as custodian bank for Luxembourg based funds linked to Bernard Madoff. The CSSF issued a statement that is even more applicable to every fund of funds in the U.S. which invested with Bernie "A custodian bank’s failure to correctly fulfill its duty of due diligence is a grave breach of its oversight responsibilities” the CSSF said.

UBS was the custodian of Access International Advisors' LuxAlpha Sicav-American Selection fund, which was shuttered by regulators because of investments related to Madoff. As the fund once held total assets of $1.4 billion, there are many angry investors, and all of them apparently are planning on suing UBS in Luxembourg courts. The CSSF's statement will only make it that more difficult for UBS to defend itself. In typical Ken Lewisian response, UBS claims that everything is wonderful:

"UBS does not have responsibility to these shareholders for the unfortunate results of the Madoff scandal. The CSSF comments will have no impact on UBS’s Wealth Management clients in Luxembourg or on UBS’s Luxembourg funds."

UBS has lately been bombarded by legal developments left and right, with a $780 million settlement last week the US last week and an subsequent lawsuit to disclose the identities of 52,000 tax evaders, who, as we wrote yesterday, should be very nervous. Sphere: Related Content

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