Spain: prosecutor probing Madoff fraud - Sovereign Regulators Probe Madoff

Spain: prosecutor probing Madoff fraud
By CIARAN GILES – 1 day ago

MADRID, Spain (AP) — Spain's anti-corruption prosecutor has opened a probe into the alleged investment fraud run by U.S. financier Bernard Madoff to determine if any persons or organizations in Spain were cooperating in the scheme, an official said Wednesday.

The probe began at the end of December and is still in its early stages, an official at the office of prosecutor Antonio Salinas said.

The official declined to give further details, but denied news reports that Spain's Banco Santander or any other entity in particular was being investigated specifically at this point.

The official spoke on condition of anonymity in keeping with the department's regulations.

Santander, one of the euro zone's largest banks by market capitalization, is one of the companies most exposed in the $50 billion scam allegedly run by Madoff. It has said it has total exposure of euro2.3 billion ($3.1 billion) in the case, the vast majority of it client money, not its own.

The leading daily El Pais said two Spanish prosecutors have been assigned to the investigation and that it would center on Andres Piedrahita, a Madrid-based Colombian who is a partner in the Fairfield Greenwich Group, a U.S.-based investment firm which recruited investors to entrust their money with Madoff.

The newspaper said the prosecutors would be probing whether people or companies in Spain may have cooperated in the alleged Madoff fraud. It said prosecutors had asked for information from the U.S. Securities and Exchange Commission and Spain's stock market regulator.

Santander said one of its funds, Optimal Strategic US Equity, had commissioned Madoff to handle investments by some of its clients.

The bank said euro2 billion of the exposure through Optimal Strategic US Equity involved money from institutional investors and international private banking customers.

The remaining euro320 million are part of the investment portfolios of Santander private banking customers in Spain.

The bank said euro17 million of its own money was exposed.

Spain's second-largest bank, BBVA, has reported exposure of up to euro300 million through indirect investments linked to Madoff, while BBVA clients stand to lose another euro30 million.