[ by Melanie Gretchen ]

HSBC's settlement with a Madoff investor may have saved the bank millions of dollars – or opened Pandora's Box for more claims.

• Kalix Fund Limited was suing the bank in Dublin for $35.6 million over losses it suffered during the collapse of Bernie Madoff's Wall Street firm. 
• British Virgin Islands-registered Kalix Fund invested in Thelma International Fund, for which HSBC, as custodian, was responsible for managing its deposits and payments;  in turn, Thelma had invested money with Madoff, who in 2009 pled guilty to running a Ponzi scheme and is currently serving a 150-year sentence.

The statement the bank released didn't disclose the terms, though the bank did classify the settlement as "amicable."  Other funds may not agree, if they acted as custodians for investors in Madoff.  Thelma was a so-called Undertakings for Collective Investment in Transferable Securities (UCITS) Fund, regulated by the European Union, which surely oversaw other Madoff investors.

"This settlement is an important development in the recovery process for investors in UCITS Madoff "feeder-funds" established in Ireland or Luxembourg.  Even though the terms of the settlement are not known, it shows that a custodian bank has been willing to compensate the true victims of the Madoff fraud, i.e. the final investors."  -- Deminor, a Brussels-based investor services firm advising around 2,500 non-U.S. investors who lost money in the Madoff scandal.

For further details, go to [Reuters, 11/12/12].