Madoff trustee Irving Picard seeks to reverse earlier court rulings in lawsuits filed against banks, including JPMorgan Chase and HSBC Holdings.  Earlier judges' rulings wiped out around $30 billion in claims, or nearly 1/3 of Picard's $103 billion in asserted claims against banks and other defendants.

• In November, U.S. District Judge Colleen McMahon ruled that Picard could seek only $425 million from JPMorgan, Madoff's main bank for two decades.  Picard had filed claims for $19.9 billion.
• In July, her colleague, Judge Jed Rakoff, dismissed $8.6 billion of Picard's claims against HSBC and Italy's UniCredit SpA.

Both judges found that Picard, a trustee for the estate of Bernard L. Madoff Investment Securities LLC, lacked the power to bring numerous claims against the banks for violating their duty to detect the fraud.  That authority, the judges ruled, belongs to the victims themselves. In two briefs filed with the U.S. Court of Appeals for the 2nd Circuit, Picard said that the judges were wrong to prevent him from seeking damages from banks he believes had aided or abetted Madoff in his fraud.  He argued that case law, the U.S. Bankruptcy Code, New York law and sound public policy give him the authority to pursue claims against the banks on behalf of customers. None of the 3 banks issued issued comments on the filings.  In the past, they have argued that, while the law allows Picard to sue to recover investors' property, the trustee had no right to pursue fraud claims against them - those claims could be brought only by the victims of a fraud. The cases before the 2nd Circuit are:  (i) Picard v. HSBC Bank Plc et al, No. 11-5175;  and, (ii) Picard v. JPMorgan Chase & Co et al, No. 11-5044. Representing HSBC is Evan Davis of Cleary Gottlieb Steen & Hamilton;  representing JPMorgan is John Savarese of Wachtell, Lipton, Rosen & Katz.   [Reuters, 2/16/12]