Santander investors oppose Madoff compensation scheme
by Gill Montia
Story link: Santander investors oppose Madoff compensation scheme
Santander’s plans to compensate customers who have lost money over the alleged fraud by Bernard Madoff, have met with a hitch.
Last week the Spanish banking group promised help for clients with investments in Optimal, part of its private banking business which has exposure to the alleged fraud.
The group said it would be issuing €1.38 billion in preferential shares by way of recompense, but only to individual customers and not to institutional investors.
In addition, the value of the preferential shares will cover the value of a client’s initial investment and not take into account any interest accrued during the period of the investment.
Santander customers who are not satisfied with the deal are now seeking an injunction in US District Court for the Southern District of Florida.
According to news agency, Reuters, investors are demanding that the share issue be halted as it could undermine a class-action lawsuit already filed by angry investors in Optimal.
Santander estimates the cost of the compensation at €500 million and the plaintiffs are also arguing that this falls far short of the €2.33 billion estimated exposure of its Optimal customers to Madoff related losses.
The case for an injunction on the compensation scheme should be heard within the next 10 days.
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