April 24, 2009 / 4:01 PM / in 9 years

Swiss judge allows charges in Madoff losses case

ZURICH (Reuters) - A Swiss magistrate ruled on Friday that criminal charges could proceed against directors of Aurelia Finance, which lost money in Bernard Madoff’s $65 billion (44.1 billion pounds)fraud, potentially prompting other litigation.

Wealth manager Aurelia lost an alleged $800 million of client money to Madoff through investments in a Madoff feeder.

Examining magistrate Marc Tappolet told Reuters charges could proceed against five Aurelia directors. A freeze on the assets of the Aurelia directors was also confirmed, lawyers said.

The decision could push other banks and asset managers who lost money to Madoff to seek to settle with investors.

A lawyer acting for several investors nursing Madoff losses said earlier this week a ruling against the Aurelia directors could prompt other investors who have lost money to act against international banks in Geneva.

Banks which lost money in the fraud, through asset management units, include Spain-based Santander (SAN.MC), Italy-based UniCredit (CRDI.MI) and Swiss-based EFG International.

The ruling could also encourage directors of other asset managers with Madoff losses to seek out-of-court settlements with investors rather than risk having their assets seized.

Swiss asset managers were among the biggest investors in Madoff’s scheme, in which some $65 billion was allegedly lost, with Geneva-based managers particularly hard hit.

In January this year Geneva-based Optimal offered to repay $1.8 billion of the $3 billion lost to Madoff after investors in Florida filed a class action against the asset manager. Optimal is owned by Santander.

In March, Geneva-based wealth manager Union Banque Privee offered to partially compensate investors for Madoff losses, while on Thursday, another Geneva asset manager, Notz & Stucki, followed suit.

Reporting by Silke Koltrowitz, writing by Emma Thomasson; Editing by David Cowell

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