British peer attacks US watchdog over 'gross negligence'
British peer attacks US watchdog over 'gross negligence'
By James Mackintosh in London and Joanna Chung in New,York
Published: February 6 2009 02:00 |
A British peer who lost money in the alleged $50bn Madoff fraud yesterday attacked the main US financial watchdog as "grossly negligent" for failing to follow up tip-offs that set out in detail the warning signs of the pyramid scheme.

Lord Jacobs, the Liberal Democrat peer who made his fortune selling the British School of Motoring, said he had "plenty" invested with Bernard Madoff. But the focus of his anger was the Securities and Exchange Commission, for not fully investigating a whistleblower's detailed exposé of the alleged fraud.

"This isn't an ordinary regulatory slip-up," he said. "It was the grossest negligence it is possible to conceive. I'm not a happy bunny, as they say."

The attack on the SEC came as a 162-page list of investors with Mr Madoff, published by the US court dealing with the bankruptcy of his brokerage, included his lawyer, Ira Sorkin, and his auditors, alongside wealthy American sports stars, actors and politicians.

However, some of those on the list, including Claude Dauphin, co-founder of metals and oil trader Trafigura, denied they had money with Madoff. The filing includes the names of individuals and entities who appeared to have been a "customer" of Mr Madoff's firm with an open account during the 12-month period prior to his arrest in December, according to the document.

The list showed that losses may have struck deep into the heart of the British establishment, featuring members of the British branch of the Rothschild banking family and representatives of other wealthy families. Lady Victoria de Rothschild, former wife of Sir Evelyn de Rothschild, was included, as was Mount Capital, which invests on behalf of other wealthy families. Five Rothschild group trusts were also on the list, but a Rothschild spokesman said clients had chosen Madoff themselves.

"There were lots of British investors with Bernie," said one representative of a wealthy family who had money invested.

In the US, Sandy Koufax, the baseball pitcher, US senator Frank Lautenberg, and jailed class-action lawyer Melvyn Weiss, were among those on the list, as was talk show host Larry King and actor John Malkovich. Mr Madoff's sons, Mark and Andrew, and his brother, Peter, were also on the list.

A subsidiary of Groupe Arnault, the holding vehicle of luxury goods billionaire Bernard Arnault, was on the list, but a spokesman said its account with Mr Madoff had been empty since 2004.

The list also includes the names of customers who called or sent e-mails to the Securities Investor Protection Corporation, which is helping with the courtappointed trustee with the liquidation. Mr Sorkin did not immediately return calls for comment yesterday, while the SEC and Mount Capital declined to comment.

On the list were many of the "feeder" funds which channelled money to Mr Madoff, but not the names of customers of the funds. Many of these are likely to be in the UK, while others are spread across Europe, South America and the US.

Additional reporting by Scheherazade Daneshkhu in Paris

Copyright The Financial Times Limited 2009
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