Luxalpha Feeder Fund Transparent From Outset, Insists UBS

by Phillip Morton, Investors Offshore.com

02 March 2009

UBS has released a statement objecting to a report published by the Swiss financial regulator, CSSF, on February 25, which argues that UBS misled investors into investing in Bernard Madoff's funds, and should reimburse investors. UBS, although regretful of the scandal, has stated that investors were fully aware of what was involved when hedging their capital in the Luxalpha fund.

The statement from the Commission de Surveillance du Secteur Financier (CSSF) claims that UBS misled those investing into the Luxalpha fund, suggesting that investors were not told that Luxalpha was in fact a feeder fund to Madoff’s hedge fund, and have claimed therefore that UBS should be held liable.

UBS has denounced the CSSF’s claims stating:

“UBS took notice of the communiqué published on February 25 from the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg. UBS does not believe the CSSF is correct in its statement.”

”The Luxalpha fund was created at the explicit request of wealthy clients who requested a tailor-made fund to enable them to continue investing their assets with Madoff. These clients were represented by sophisticated financial institutions being fully aware of the nature of the investments."

"These investors, their advisors and the CSSF were informed about the fact that the sole purpose of Luxalpha was to enable the funds to be invested with Madoff. The fund documentation made it very clear that UBS (Luxembourg) SA was not expected to be responsible for the safekeeping of the assets. The fund documentation contained an explicit waiver to that effect. UBS does not have responsibility to these shareholders for the unfortunate results of the Madoff scandal."

UBS further urged within its statement that the communiqué from the CSSF has no impact on UBS's Wealth Management clients in Luxembourg or on UBS's Luxembourg funds.

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