UBS and HSBC face investors' complaint in Madoff case

By Silke Koltrowitz and Lisa Jucca

ZURICH (Reuters) - Investor activist group Deminor said on Thursday it is to file a legal complaint against UBS, HSBC, Hyposwiss and others for allegedly neglecting clients who invested in Madoff-related products.

The complaint will be filed before the end of the month in courts in Luxembourg and Ireland, where the funds through which some of the banks' clients invested are located, Fabrice Remon, who heads Deminor France, told Reuters.

The banks involved acted as depository banks for the funds and did not verify the true nature of the investments, Remon said. Former Nasdaq chairman Bernard Madoff was arrested last month for allegedly running a multi-billion dollar fraud.

"We blame UBS and HSBC ... for their role as depository bank and controller," Remon said.

"People realise now the responsibility is at the level of the depositary banks, who did not do their job in checking what was inside (the portfolios)."

Remon said Deminor decided to act after investors' complaints last week.

He said the investments at the centre of the complaint were labelled as UCIT, an EU regulated retail mutual fund product that can be sold across the EU in return for strong consumer protection.

Some clients of UBS invested in Madoff-related products through the Luxembourg-based fund Luxalpha.