[JURIST] The Paris prosecutor's office [official website, in French] on Tuesday announced that it has opened an investigation into the French business operations of US financier Bernard Madoff [JURIST news archive], following accusations of abuse of confidence and fraud. The inquiry was sparked by a French citizen's suit against the Swiss firm UBS [corporate website] for fraud and betrayal of trust, after the firm invested and lost her savings in the Luxembourg fund LuxAlpha. On Wednesday, the Association of the Luxembourg Fund Industry [group website] announced that sixteen Luxembourg-based funds connected to Madoff, including LuxAlpha, have stopped investor redemptions [AP report]. Dozens of French citizens are expected to join the LuxAlpha suit or file similar actions, with total damages incurred by French investors in Madoff-connected funds estimated at 500 million euros. The prosecutor's office has discretion to dismiss the case, bring charges, or open a judicial inquiry.
Earlier this month, the UK Serious Fraud Office (SFO) [official website] announced an investigation into Madoff's UK business operations [JURIST report] to determine whether any criminal offenses have been committed in the country. Madoff was charged [JURIST report] last month in the US with securities fraud after he allegedly told two employees that his investment advisory business was "basically, a giant Ponzi scheme." In the week following Madoff's charges, US Securities and Exchange Commission (SEC) [official website] Chairman Christopher Cox said that he would launch an immediate investigation [press release; JURIST report] into how the fraud allegedly perpetrated by Madoff went undetected for so long. During confirmation hearings last week, SEC Chairman-Designate Mary Schapiro expressed her commitment to reinvigorate enforcement at the SEC, and Attorney General nominee Eric Holder confirmed his commitment to investigate and prosecute financial fraud [JURIST reports].