A Luxembourg court has ruled that victims of the Bernard Madoff scandal who invested through the $1.4bn Luxembourg-based LuxAlpha fund set up by UBS cannot sue the Swiss bank and auditor Ernst & Young directly.
Instead, they must file claims via the liquidators of the fund, a judge said on Thursday in a test case involving 10 investors.
More than 100 lawsuits have been filed against UBS, which served as custodian for the LuxAlpha fund, claiming it neglected its duties by delegating control of the assets to Mr Madoff.
The 27-page ruling is a blow to the investors because it limits their ability to recover assets from UBS as individuals and is likely to make it harder for them to press their claims that they were misled as to the nature of the fund, lawyers said.
UBS, which denies wrongdoing, benefits from the ruling because it will only have to defend itself in the single suit filed by LuxAlpha??s administrator, rather than myriad claims.
??UBS welcomes the clarification of Luxembourg law as expressed by today??s decisions of the Luxembourg Commercial Court,? Tatiana Togni, a spokeswoman for the bank, said in an e-mail.
