Upcoming SCOTUS HSBC vs Picard decision to have major ramifications

Upcoming SCOTUS HSBC vs Picard decision to have major ramifications

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The Supreme Court’s pending decision on whether to grant review of HSBC Holdings PLC vs Picard will have major ramifications not only on the ability of Irving Picard, the bankruptcy trustee of the Madoff estate, to pursue billions of dollars of transfers for the benefit of Madoff victims, but is sure to have an effect on international bankruptcy proceedings writ large. Selendy & Gay partner David Flugman, who represents Herald Fund SPC, one of the largest investment fund victims of the Madoff Ponzi scheme, discusses the issues and implications of SCOTUS’s highly anticipated decision, which is expected on June 1st. He notes:

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Q1 2020 hedge fund letters, conferences and more

The Upcoming HSBC vs Picard decision

In particular, its decision whether to grant review and, if so, whether to affirm or reverse the Second Circuit, will determine the circumstances under which offshore funds/investors can expect to be hauled into U.S. courts over money they received in wholly foreign transactions. These kinds of transfers are routine in the hedge fund world where U.S.-based “master funds” invest money pooled by foreign “feeder funds” from foreign individuals and entities.”

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If review is granted, and the Supreme Court reverses the Second Circuit, the Madoff trustee (and future U.S. trustees) will likely have to bring lawsuits abroad to recover transfers between foreign investors, even if the money originated from the United States. If review is denied, or alternatively if the Supreme Court affirms the Second Circuit, the Madoff trustee will have the chance to recover up to $2.1 billion in transfers between those foreign investors and the power of US bankruptcy trustees to pursue the return of fraudulent transfers made by U.S. debtors will be greatly expanded.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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