NEW YORK May 13 KeyCorp (KEY.N) said it is
liquidating an investment fund linked to Bernard Madoff's $65
billion Ponzi scheme, after its investors suffered as much as
$186 million of losses.
The Cleveland-based bank's Austin Capital Management Ltd
unit plans to close its Safe Harbor Fund and return clients'
money, KeyCorp said in a statement on Wednesday.
On Monday, KeyCorp said in its quarterly report that it
decided in April to "curtail" operations at Austin in the wake
of client losses that "stem from investments that Austin made
in certain Madoff-advised 'hedge' funds."
Madoff admitted in March to orchestrating the biggest
investment fraud in Wall Street history.
He pleaded guilty to 11 charges including securities fraud,
money laundering and perjury, and faces a prison sentence of up
to 150 years. Sentencing is expected on June 16.
KeyCorp bought Austin on April 1, 2006. The hedge fund firm
had about $900 million of assets under management at the time.
The bank said plaintiffs filed three lawsuits seeking
class-action status and one arbitration case against Austin in
the first quarter. KeyCorp said it has insurance to cover
litigation costs, and that any charges related to curtailing
Austin's operations will not be material.
Shares in Keycorp were down 32 cents, or 5.3 percent, to
$5.68 in late afternoon trade on the New York Stock Exchange.
(Reporting by Jonathan Stempel, editing by Leslie Gevirtz)