Santander Can’t Be Sued for Madoff Under U.S. Law, Judge Rules

Banco Santander SA (SAN) and its affiliates can’t be sued under U.S. securities law for allegedly putting investors’ money into Bernard Madoff’s brokerage because the investments were made outside the U.S., a federal judge ruled.

The investors, who are seeking to mount a group lawsuit against the Madrid-based bank and its Optimal Investment Management Services SA, can continue to sue the parties for common law fraud, negligent misrepresentation and aiding and abetting fraud, U.S. District Judge Shira Scheindlin said today in a court order filed Manhattan.

The investors in the Optimal Strategic U.S. Equity Fund allege that the so-called feeder put all of its assets with Madoff even though there were signs of a Ponzi scheme.

The case is In re: Optimal U.S. Litigation, 10-04095, U.S. District Court, Southern District (Manhattan).

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net