Banco Santander has agreed a $235 million out-of-court settlement with the trustee overseeing the liquidation of Bernard L Madoff Investment Securities.
The agreement will avoid a lawsuit from Irving Picard over claims linked to hedge fund investments made with Mr Madoff by Santander’s Optimal arm.
Picard says the settlement amounted to around 85% of his claim against the Spanish bank.
Once it is paid, he will have collected approximately $1.22 billion for victims of Madoff’s $65 billion Ponzi fraud.
“The funds’ potential clawback liability did not imply any wrongdoing by the funds,” the bank says in a statement reported by Bloomberg.
Santander has already paid compensation to private banking clients affected by the scandal. Their combined losses stood at 1.38 billion ($1.92 billion).
However, according to Bloomberg the bank could still face a class-action lawsuit filed by a number of South American investors, who contest that it failed to carry out proper due diligence on its investments with Madoff’s firm.
The former Nasdaq chairman pleaded guilty to orchestrating a Ponzi scheme in March. He faces up to 150 years in prison.