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Deutsche Bank DB has been given green signal by a U.S. judge to sue two offshore funds for backing out of a deal under which they were supposed to sell $1.6 billion of claims in the bankruptcy of fraud Bernard Madoff's firm. The news was reported by Reuters.
Kingate Global Fund and Kingate Euro Fund are the two funds that channeled client money to Madoff before his Ponzi scheme collapsed in 2008. The article said, Deutsche Bank has accused them of having "sellers' remorse" as they agreed to sell the claims at 66 cents on the dollar in 2011, and later witnessed their value increase significantly.
U.S. District Judge Edgardo Ramos in Manhattan refused to dismiss the lawsuit stating that the agreement was "firm, irrevocable and binding". He also said that Deutsche Bank can pursue a claim that the Kingate funds acted in bad faith by filing for protection under bankruptcy in September 2019 to escape any legal encounters.
Madoff’s hedge fund was one of the largest financial frauds that cost its clients about $65 billion in a Ponzi scheme. It came to light in December 2008.
The fraudster collected money from clients under the company name of Bernard L. Madoff Investment Securities LLC with no intentions of investing it, per the scheme he had informed them of. Madoff instead used the money collected from new investors to return principal and fictitious profits to older ones.
Late last year, U.S. Department of Justice announced that The Madoff Victim Fund will distribute payments to more than 30,000 people globally who were wronged out of their investments between 1970 and 2000.
Deutsche Bank's cost-control moves and its several strategic initiatives are expected to support financials in the quarters ahead. Also, efforts to improve operating efficiency are likely to support profitability.
Shares of Deutsche Bank have gained 42.9% over the past six months compared with the industry’s growth of 46.4%.
Currently, Deutsche Bank carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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