HSBC’s Victory May Cut $100 Billion Jackpot for Madoff Investors

A courtroom win by HSBC Holdings Plc may reduce the $100 billion trustee Irving Picard is seeking on behalf of Bernard Madoff’s clients, undercutting bets traders have made on victims’ claims.

U.S. District Judge Jed Rakoff on July 28 threw out almost $9 billion in damages that Picard demanded from HSBC and feeder funds, saying the trustee was free to pursue $2 billion in bankruptcy claims. Picard has no right to sue on behalf of customers or the Madoff estate, using common-law claims against parties “who allegedly violated a duty to Madoff Securities’ customers by failing to detect Madoff’s fraud,” Rakoff ruled.