Thema International Fund PLC, based in

Dublin Dublin (; , or ) is the capital and largest city of Ireland. On a bay at the mouth of the River Liffey, it is in the province of Leinster, bordered on the south by the Dublin Mountains, a part of the Wicklow Mountains range. At the 2016 c ...

, 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.

Investment manager, investment adviser, and custodian

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

investment manager Investment management is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified investment goals for the benefit of investors. Investors may be institut ...

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

euro The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...

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 in Vienna, Austria) 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 ...

, 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 , neighboring_municipalities= Carouge, Chêne-Bougeries, Cologny, Lancy, Grand-Saconnex, Pregny-Chambésy, Vernier, Veyrier , website = https://www.geneve.ch/ Geneva ( ; french: Genève ) frp, Genèva ; german: link=no, Genf ; it, Ginevr ...

, Switzerland. Universal Investment (based in

Frankfurt Frankfurt, officially Frankfurt am Main (; Hessian: , " Frank ford on the Main"), is the most populous city in the German state of Hesse. Its 791,000 inhabitants as of 2022 make it the fifth-most populous city in Germany. Located on it ...

, 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 acted as

custodian Custodian may refer to: Occupations * Janitor, a person who cleans and maintains buildings * Goalkeeper, in association football * Fullback, in rugby, also called a sweeper * Legal guardian or conservator, who may be called a custodian in some ...

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, such as interest payments, coupons, cas ...

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 fraudster and financier who was the admitted mastermind of the largest Ponzi scheme in history, worth about $64.8 billion. He was at one time chairman of the NASDAQ ...

'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 liabilities, often in relation to open-end, mutual funds, hedge funds, and venture capital funds. Shares of such funds registered with the U.S. Securities and Exc ...

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 Ponzi scheme, 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 political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...

as a registered UCITS vehicle, and specifically by the Central Bank of Ireland, the regulators were not effective at uncovering Madoff's scheme.

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

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 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