Thema International Fund PLC, based in

Dublin Dublin is the capital and largest city of Republic of Ireland, Ireland. Situated on Dublin Bay at the mouth of the River Liffey, it is in the Provinces of Ireland, province of Leinster, and is bordered on the south by the Dublin Mountains, pa ...

, Ireland, is a Dublin-listed, Undertakings for Collective Investment in Transferable Securities (UCITS) III-certified,

open-end fund Open-end fund (or open-ended fund) is a collective investment scheme that can issue and redeem shares at any time. An investor will generally purchase shares in the fund directly from the fund itself, rather than from the existing shareholders. ...

incorporated in Ireland, which was launched in December 1996. It created only one sub-fund, the Thema Fund. The fund had a minimum investment requirement of $50,000. Thema Fund acted as a feeder fund for Bernard Madoff, seeking funds from investors and channeling them to Madoff Securities. As of November 2008, the then-purported net asset value invested in the fund was $1.1 billion. The fund stopped providing redemptions in December 2008, shortly after the

Madoff investment scandal The Madoff investment scandal was a major case of stock and securities fraud discovered in late 2008. In December of that year, Bernie Madoff, the former Nasdaq chairman and founder of the Wall Street firm Bernard L. Madoff Investment Securities ...

broke, and it was discovered that Madoff was running a

Ponzi scheme A Ponzi scheme (, ) is a form of fraud that lures investors and pays Profit (accounting), profits to earlier investors with Funding, funds from more recent investors. Named after Italians, Italian confidence artist Charles Ponzi, this type of s ...

Investment manager, investment adviser, and custodian

Bank Medici AG, an Austrian bank, was Thema Fund's

investment manager Investment management (sometimes referred to more generally as financial asset management) is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified inve ...

. In return for finding investors, Bank Medici collected fees of 4.6 million

euro The euro (currency symbol, symbol: euro sign, €; ISO 4217, currency code: EUR) is the official currency of 20 of the Member state of the European Union, member states of the European Union. This group of states is officially known as the ...

s from Thema International Fund in 2007. Bank Medici is 75% owned by its founder, Austrian banker

Sonja Kohn Sonja Kohn (née Türk; born 5 August 1948) is an Austrian banker. Biography Kohn was born to Jewish refugees from the Holocaust from Eastern Europe. She grew up in Vienna. In the 1970s, with her husband Erwin Kohn, she started an import-export bu ...

, and 25% owned by Italian banking company Unicredit SpA. Thema Fund was distributed to investors by Genevalor, Benbassat & Cie., an

investment adviser A financial adviser or financial advisor is a professional who provides financial services to clients based on their financial situation. In many countries, financial advisors must complete specific training and be registered with a regulatory ...

based in Geneva, Switzerland. Universal Investment (based in Frankfurt, Germany), Themis MN Fund Plc (based in Geneva), Carat Lux Sicav Global One, and BG Umbrella Fund were among the fund's investors.

HSBC Holdings Plc HSBC Holdings plc ( zh, t_hk=滙豐; initialism from its founding member The Hongkong and Shanghai Banking Corporation) is a British universal bank and financial services group headquartered in London, England, with historical and business li ...

acted as

custodian Custodian may refer to: Occupations * Fullback (rugby league), in rugby, also called a sweeper * Janitor, a person who cleans and maintains buildings * Legal guardian or conservator, who may be called a custodian in some jurisdictions Religion ...

for the fund.

Returns

The fund reported a

rate of return In finance, return is a profit on an investment. It comprises any change in value of the investment, and/or cash flows (or securities, or other investments) which the investor receives from that investment over a specified time period, such as i ...

of 8% for the 11 months ended 28 November 2007. During the same period, competing funds fell by an average of 39%.

Madoff scandal

Thema Fund acted as a feeder fund for

Bernard Madoff Bernard Lawrence Madoff ( ; April 29, 1938April 14, 2021) was an American financial criminal and financier who was the admitted mastermind of the largest known Ponzi scheme in history, worth an estimated $65 billion. He was at one time ...

's securities investment firm (Bernard L. Madoff Investment Securities LLC), seeking funds from investors and channeling the funds to Madoff Securities. As of 30 November 2008, the fund's actual transfers to Madoff Securities minus the fund's withdrawals were approximately $312 million, but the then-purported

net asset value Net asset value (NAV) is the value of an entity's assets minus the value of its Liability (financial accounting), liabilities, often in relation to open-end fund, open-end, mutual fund, mutual funds, Hedge fund, hedge funds, and Venture capital, v ...

invested in the fund at the time was $1.1 billion. The fund stopped providing redemptions on 14 December 2008, shortly after the

broke, when it was discovered that Madoff was running a

, Madoff was arrested, and a U.S. court froze the assets of Madoff Securities. Madoff was later sentenced to prison for 150 years. It was alleged that Kohn assisted Madoff in criminal activities in effecting the Ponzi scheme. Although Thema International Fund was regulated by the

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...

as a registered UCITS vehicle, and specifically by the

Central Bank of Ireland The Central Bank of Ireland () is the national central bank for Ireland within the Eurosystem. It was the Irish central bank from 1943 to 1998, issuing the Irish pound. It is also the country's main financial regulatory authority, and since 2 ...

, the regulators were not effective at uncovering Madoff's scheme.

Reuters Reuters ( ) is a news agency owned by Thomson Reuters. It employs around 2,500 journalists and 600 photojournalists in about 200 locations worldwide writing in 16 languages. Reuters is one of the largest news agencies in the world. The agency ...

wrote after the scandal broke:

That was the Madoff universe, where regulators vanished and investors didn't care.

Litigation

By December 2009, the fund had been involved in 50 civil lawsuits in Ireland relating to the Madoff scandal. Individual Thema investors sued Thema International Fund and 27 other defendants, including custodian bank HSBC, in the

U.S. District Court for the Southern District of New York The United States District Court for the Southern District of New York (in case citations, S.D.N.Y.) is a federal trial court whose geographic jurisdiction encompasses eight counties of the State of New York. Two of these are in New York City ...

in 2009, but in January 2012 the US court held that Ireland was a more appropriate forum to hear the case against HSBC, and dismissed the U.S. case. In 2013, Thema was suing HSBC in Ireland for US$1.5 billion. The parties began what was slated to be a 14-week trial in the High Court in Dublin on 30 April 2013. The case focused on the bank's role and potential liability as "

" to the investment fund that deposited money with Madoff. On 29 May 2013 the parties agreed to a settlement of $250 million, or 1/6th of what plaintiff had sought. It was approved by Thema shareholders, and a settlement payment was made from HSBC to Thema. However, no sooner had the bank transfer happened than the Madoff Trustee sought, and won, an injunction preventing Thema from distributing the HSBC settlement proceeds to its shareholders on the basis that the trustee considered some of Thema's shareholders to be Madoff 'bad actors.' In September 2017 Thema International Fund agreed to pay $687 million to resolve a trustee lawsuit brought on behalf of the fraud victims that followed from Madoff's frauds.Irish Times report, 7 September 2017 (accessed 11 September 2017)
/ref>

References

{{Madoff investment scandal Companies based in Dublin (city) Investment companies of Ireland Irish companies established in 1996 Financial services companies established in 1996 Madoff investment scandal

Investment manager, investment adviser, and custodian

Returns

Madoff scandal

Litigation

See also

References