A group of 78 French victims of Bernard Madoff's giant Ponzi scheme must await the outcome of legal proceedings in Luxembourg to find out if they stand to recoup some $40 million in investments from Swiss bank UBS, a Paris court said on Thursday.
The investors had filed a complaint in Paris accusing UBS of "tricking" them by sponsoring a Luxembourg-registered fund, Luxalpha, which for four years fed assets directly to the convicted swindler without saying so in its prospectus.
The Paris Commercial Court declared itself competent to judge on the matter but declined to do so before further clarification in Luxembourg, where Luxalpha is being liquidated.
This decision appeared to give more breathing room to UBS, which has denied the charge, as it also fights a $2 billion lawsuit from the trustee liquidating Madoff's companies.
The trustee, Irving Picard, has said UBS's backing lent the Luxalpha fund "an aura of legitimacy" while shielding the bank via hidden side agreements.
"It's a decision that we find hard to understand and that is disappointing for the investors," said Sophie Scemla, a partner at Orrick, Rambaud and Martel, which is defending the investors.
UBS's lawyer, Denis Chemla, was unavailable for a comment.
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