Funds News

UPDATE 1-US law firm files Madoff class action in New York

(Updates with developments in Florida lawsuit, Botin comment)

MADRID, Feb 5 (Reuters) - A U.S. law firm has filed a lawsuit in a U.S. court in New York on behalf of investors in Optimal, an investment fund of Spain's Santander SAN.MC affected by the alleged $50 billion fraud by U.S. financier Bernard Madoff.

Coughlin Stoia Geller Rudman & Robbins LLP, which recovered $7 billion for Enron victims, filed the lawsuit in the Southern District of New York, alleging wrongful conduct in connection with the Ponzi scheme run by Madoff, according to court documents file on Thursday.

Optimal Strategic U.S. Equity is an investment fund of the eurozone’s largest bank Santander, which announced client exposure of 2.33 billion euros ($3 billion) to Madoff in December.

Unlike other Madoff-related cases, the suit does not contain a securities claim, meaning plaintiffs can receive relevant information about the case before any trial that could bring to light previously unknown details on the case.

Coughlin Stoia called an offer by Santander to partially compensate victims “woefully inadequate” and accused the bank of “attempting to coerce them into surrendering their legal claims for a small fraction of their losses.”

Santander has offered Optimal investors a total of 1.38 billion euros in preference shares paying a 2 percent coupon and with a call after 10 years. [ID:nLS214943]

Spanish lawyers for Santander customers, Cremades & Calvo Sotelo, said earlier this week it would seek tailor-made solutions from the bank for affected clients. [ID:nL3323183]

In a separate case in Florida, lawyers for Optimal investors asked a judge to bar the bank from presenting compensation offers to investors in what they claimed were closed-door, high-pressure meetings, according to court documents.

“Santander International has launched a misleading and coercive campaign to pick off putative class members, one-by-one, by pressuring them to release their claims based on incomplete and misleading information,” the motion, by Labaton Sucharow LLP lawyers, said.

Lawyers in the Florida case want the judge to approve any individual out-of-court settlements, according to the documents. A hearing is set for Feb. 18, or Feb. 19, if a scheduling conflict arises, in federal court in Miami.

At a press conference on Thursday, Santander Chairman Emilio Botin was asked about the Madoff litigation, and said the bank was “very accustomed to court cases” and was “not worried.”

“We are very happy with our decision (on compensation) for our clients, and they are as well,” Botin said.