Banks win ruling in Madoff trustee lawsuits

NEW YORK (Reuters) - Banks accused of failing to detect Bernard Madoff's fraud won a victory in a U.S. federal court, as a judge said the trustee seeking money for victims of the Ponzi scheme could not pursue many of his claims.

The decision by U.S. District Judge Jed Rakoff in Manhattan could set back efforts by the trustee Irving Picard to recover money for Madoff victims, on whose behalf he has filed more than $103 billion of lawsuits. Many Madoff victims are pursuing separate claims.

In his decision, Rakoff dismissed Picard's common law claims against HSBC Holdings Plc , Italy's UniCredit SpA and Pioneer Alternative Investment Management Ltd.

The trustee had sought to recover on the grounds that the defendants violated a duty to Madoff's customers by failing to detect the fraud.

But Rakoff said a federal law addressing the liquidation of brokerages "conveys no authority" on a trustee to bring such claims. These claims included aiding and abetting fraud, aiding and abetting a breach of fiduciary duty and unjust enrichment.

In a statement, a Picard spokeswoman said the trustee and his lawyers are reviewing the decision. "Prior to a thorough evaluation of the ruling, we have no comment," she added.

Marco Schnabl, a lawyer for UniCredit, said: "We are pleased with the decision. We're analyzing it to see where we go from here."

HSBC was not immediately available for comment.

Picard had argued that case law, consumer protection laws and common sense allow him to sue banks that he believes aided or abetted Madoff in his fraud, rather than simply try to "claw back" money from alleged beneficiaries of that fraud.

Banks disagreed. They said that while the law allows Picard to sue to recover investors' property, the trustee had no right to pursue fraud claims against them, because such claims could be brought only by victims of a fraud.

(Reporting by Jonathan Stempel; Additional reporting by Nick Brown, Knut Engelmann and Alison Frankel; editing by Carol Bishopric)