U.S. court asked to halt Santander’s Madoff payout
Written on February 2, 2009
Investors who bought products sold by Santander’s Madoff-hit unit Optimal, have asked a U.S. judge to halt the bank’s plan to compensate investors with new shares, El Mundo reported, citing a court writ.
Investors had served papers in a South Florida court demanding the issue of shares be stopped until the question of whether Santander shared some responsibility for the alleged fraud had been settled, the newspaper said.
According to the suit, Santander had launched a campaign that was “coercive and deceitful, that intended to pressure those affected to withdraw their suits one by one,” El Mundo quoted the document from law firm Labaton Sucharow as saying.
A Santander spokesman declined to comment on the report.
The writ served by Labaton said the bank’s compensation plan was “onerous.”
Santander announced last week it would compensate all individual clients who invested in the Optimal Strategic U.S. Equity Fund through the issue of 1 what is a good credit score.38 billion euros ($1.77 billion) in preferential shares with an annual coupon of 2 percent.
The bank’s spokesman again denied a report from news agency EFE on Friday that the bank had set a deadline for clients to sign up to the scheme by Feb 5.
The U.S. suit also says that Santander’s offer stipulates those receiving shares not only had to entrust them to the bank but would have to keep the same level of assets, or more, in the bank at the time they signed their contract.
The share issue will cost Santander 500 million euros, booked against its 2008 accounts. This pre-tax cost is based on a theoretical current market value for the preference shares, which will be listed in Spain.
Santander is considering its own legal action relating to the alleged Madoff fraud.
(Reporting by Ben Harding)
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