Luxembourg decries French Madoff claims

Luxembourg hit back on Tuesday at French suggestions that the Grand Duchy’s more flexible interpretation of European Union financial regulations had contributed to investors’ losses in the $50bn Madoff scandal, saying Paris did not know what it was saying.

Luc Frieden, treasury and justice minister, told the Financial Times that the French government had made the claims “without properly informing itself”.

He added that he saw no pressing need to reinforce Europe-wide protection for investors in investment funds, although Luxembourg would support such an initiative if the need were clearly demonstrated.

Christine Lagarde, French finance minister, on Monday sent a letter to Charlie McCreevy, EU internal market commissioner, and Jean-Claude Juncker, Luxembourg’s prime minister, calling for an overhaul of European rules on investment funds.

Ms Lagarde suggested Luxembourg and some other member states had applied EU rules much more loosely than France.

The letter was prompted by mounting anger in France over the role of the Luxembourg arm of UBS, which delegated some custodian responsibilities for its two Madoff feeder funds.

The Swiss bank is facing at least two lawsuits in Luxembourg from angry French investors, including one filed by the securities house Oddo et Cie.

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