Madoff's $50bn fraud sends shockwaves worldwide

USA's Securities and Exchange Commission (SEC) has come under sharp criticism after it discovered late last week Bernard L Madoff Investment Securities had allegedly been trading while insolvent for decades without being detected, with losses of $50bn (£34bn).

BNP Paribas SA, Europe’s third-biggest bank told Bloomberg it stands to lose as much as €350m through indirect exposure to Bernard Madoff’s investment advisory business if the assets of its hedge funds are 'nil', while Spanish Santander bank had more than €2.33bn (£2.08bn) worth of exposure, The Times reports.

Madoff, a former NASDAQ chairman, was arrested last Thursday in New York, after confessing to his two sons, senior Madoff executives, he had been operating a Ponzi scheme for decades - which pays early investors with money raised from new investors - possibly wiping out fortunes of many wealthy American socialites who reportedly queued up to be allowed to join his select client list, according to The Independent.

In the UK, Nicola Horlick's hedge-fund manager Bramdean Alternatives appears to have lost at least £10m. In addition, it is understood Japanese brokerage house Nomura, which took over the Lehman Brothers European business, is also among the victims.

Further reading:

Read The Times story

Read The Independent story