MIAMI — Two investors filed a class action lawsuit against a Spanish investment conglomerate, its subsidiary and investment manager, as well as the auditor, administrator and custodian of an investment fund and others on Jan. 26, alleging that the defendants violated federal securities laws by failing to provide the requisite due diligence before investing in the Bernard L. Madoff Ponzi scheme (Inversiones Mar Octava Limitada, et al. v. Banco Santander S.A., et al., No. 09-20215, S.D. Fla.).
The complaint was filed in the U.S. District Court for the Southern District of Florida by investors Inversiones Mar Octava Limitada and Marcelo Guillermo Tests on behalf of all individuals or entities “who, (i) owned shares of [Optimal Strategic US Equity Ltd.] Optimal SUS on December 10, 2008, or (ii) purchased shares of Optimal SUS from January 27, 2004 to December 10, 2008, and were damaged thereby.”
The investors allege that Banco Santander S.A., subsidiary Santander International, investment manager Optimal Investment Services S.A. and its Chief Executive Officer Manuel Echeverria Falla and directors Anthony L.M. InderRieden and Brian Wilkinson, fund auditor PriceWaterhouseCoopers, fund administrator HSBC Securities Services Ltd. and fund custodian HSBA Institutional Trust Services Ltd. violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5 by issuing a series of false and misleading statements in connection with Banco Santander investment of Optimal Investment’s capital in the Madoff Ponzi scheme. Additional claims for breach of fiduciary duty, gross negligence, negligent misrepresentation, unjust enrichment and professional malpractice have also been made.
Misrepresentations Made
Specifically, the investors contend that the defendants issued a series of misrepresentations that they had provided the requisite due diligence before investing with Madoff’s investment firm, when in fact, “Optimal Investment received a handsome compensation for this supposed ‘intensive due diligence,’ ‘careful analysis,’ and ‘detailed scrutiny’ — a weighted average annual commission of 1.90% of assets under management.”
“Based on the reported loss by Banco Santander in Optimal SUS suffered by its clients of approximately € 2.33 billion, Optimal Investment was paid almost € 44 million annually. Despite this lucrative remuneration, Optimal Investment and Banco Santander failed to conduct reasonable and adequate due diligence and lost all of the Plaintiffs’ and the Class’ monies,” the investors say.
The investors are represented by Michael A. Hanzman of Hanzman Gilbert in Coral Gables, Fla., and Joel H. Bernstein and Javier Bleichmar of Labaton Sucharow in New York.