HSBC pays a $1.1 billion financial fraud fine policy

British bank HSBC revealed that it had allocated $1.1 billion to pay a fine, after it lost a lawsuit filed by investors who lost their money in a major investment fraud led by the late American Bernard Madoff.

The bank, which is headquartered in London, explained that it lost part of a judicial appeal before the Luxembourg court last Friday, and that this amount it will pay will be included in the third quarter results that will be announced next Tuesday.

After this announcement by the bank, HSBC shares fell by about 1% in Monday morning trading on the stock exchange.

The case dates back to a lawsuit filed by the European Investment Fund “Herald Fund SPC” in 2009 against the British bank, which was the custodian of its investments in Madoff’s funds.

The Herald Fund asked the bank to compensate for losses in cash and securities related to Madoff’s pyramid scheme, which is considered one of the largest financial fraud scandals in history.

This ruling represents the latest blow to the British bank after it announced last month a deal worth $13.6 billion to buy all the shares of Hang Seng Bank, listed in Hong Kong, and turn it into a private company.

Last July, HSBC disclosed fees worth $2.1 billion to cover losses related to its stake in China Bank of Communications, in addition to costs associated with its exit from its businesses in Canada and Argentina.