Paying for the sins of our fathers 🥴 HSBC sets aside $1.1bn for Bernie Madoff fraud claim.
28/10/2025
The FTSE 100 banking giant HSBC has said it will book a $1.1 billion provision in its third-quarter results after losing part of an appeal in a long-running lawsuit tied to Bernard Madoff’s Ponzi scheme.
In a dramatic turn of events tied to one of the most infamous financial frauds in history, HSBC Holdings plc has announced a $1.1 billion provision in its third-quarter earnings to cover potential liabilities stemming from the Bernard Madoff Ponzi scheme.
The FTSE 100 banking giant disclosed the provision after losing part of an appeal in a long-running U.S. lawsuit. The case, brought by the trustee liquidating Madoff’s firm, alleges that HSBC and other financial institutions facilitated or failed to prevent the flow of illicit funds through feeder funds connected to Madoff’s fraudulent investment empire.
The bank’s decision to set aside the funds reflects the ongoing legal exposure and reputational risks associated with its historical relationships with Madoff-linked entities. HSBC has consistently denied wrongdoing, arguing that it acted in good faith and was unaware of the fraud at the time.
Background: The Madoff Legacy
Bernard Madoff was arrested in December 2008 for orchestrating a $65 billion Ponzi scheme, the largest in history. His firm, Bernard L. Madoff Investment Securities LLC, collapsed during the financial crisis, leaving thousands of investors—including charities, pension funds, and high-net-worth individuals—devastated.
Since then, Irving Picard, the court-appointed trustee, has recovered over $13 billion for victims by pursuing legal claims against those who allegedly benefited from or enabled the fraud[1].
HSBC’s Legal Battle
HSBC’s involvement centres on its role as a custodian bank for several Madoff feeder funds. The trustee claims HSBC failed to conduct adequate due diligence and ignored red flags. While the bank has successfully defended parts of the case, the recent appellate decision has revived significant portions of the claim, prompting the financial provision.
The bank stated that the $1.1 billion charge will be reflected in its Q3 2025 results, impacting its bottom line but not its capital adequacy ratios.
Industry Reaction
Financial analysts say the move underscores the long tail of legacy risks for global banks involved in pre-crisis investment structures.
Said one analyst.
- “This is a reminder that historical exposure can resurface even decades later,”
References
https://www.bloomberg.com/graphics/2018-recovering-madoff-money/
The Team
Meet the team of industry experts behind Comsure
Find out moreLatest News
Keep up to date with the very latest news from Comsure
Find out moreGallery
View our latest imagery from our news and work
Find out moreContact
Think we can help you and your business? Chat to us today
Get In TouchNews Disclaimer
As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email info@comsuregroup.com.
As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email info@comsuregroup.com.