Thema Fund acted as a
feeder fund for
Bernard Madoff's securities investment firm (Bernard L. Madoff Investment Securities LLC), seeking funds from investors and channeling the funds to Madoff Securities. The fund stopped providing redemptions on 14 December 2008, shortly after the
Madoff investment scandal broke, when it was discovered that Madoff was running a
Ponzi scheme, Madoff was arrested, and a U.S. court
froze the assets of Madoff Securities. It was alleged that Kohn assisted Madoff in criminal activities in effecting the Ponzi scheme.
Reuters wrote after the scandal broke: That was the Madoff universe, where regulators vanished and investors didn't care. Individual Thema investors sued Thema International Fund and 27 other defendants, including custodian bank HSBC, in the
U.S. District Court for the Southern District of New York in 2009, but in January 2012 the US court held that Ireland was a more appropriate forum to hear the case against HSBC, and dismissed the U.S. case. In 2013, Thema was suing HSBC in Ireland for US$1.5 billion. The parties began what was slated to be a 14-week trial in the
High Court in Dublin on 30 April 2013. The case focused on the bank's role and potential liability as "
custodian" to the investment fund that deposited money with Madoff. It was approved by Thema shareholders, and a settlement payment was made from HSBC to Thema. However, no sooner had the bank transfer happened than the Madoff Trustee sought, and won, an injunction preventing Thema from distributing the HSBC settlement proceeds to its shareholders on the basis that the trustee considered some of Thema's shareholders to be Madoff 'bad actors.' In September 2017 Thema International Fund agreed to pay $687 million to resolve a trustee lawsuit brought on behalf of the fraud victims that followed from Madoff's frauds. ==See also==