The U.S. Supreme Court on Monday asked the administration of President Barack Obama to weigh in on whether the trustee seeking money for the victims of convicted Ponzi-schemer Bernard Madoff can recover damages from banks he accused of aiding in the fraud.
The court invited Solicitor General Donald Verrilli to file a brief offering his views on whether a lower-court ruling that prevented trustee Irving Picard from recovering nearly $30 billion from various banks, including JPMorgan Chase & Co and HSBC Holdings Plc, should remain intact.
Picard last week announced a $325 million settlement with JPMorgan, meaning the bank will be dropped from the case.
That settlement, which must be approved by a judge, was announced just after JPMorgan struck a deal with U.S. prosecutors and bank regulators to pay more than $2 billion to resolve charges that it failed to follow up on suspicious activity by Madoff, who was a client of the bank for more than two decades.
The other banks involved in the case are Italy's UniCredit SpA and Switzerland's UBS AG.
There are separate claims against the banks in a class action case that is not related to the issue before the Supreme Court.
In June, the 2nd U.S. Circuit Court of Appeals said Picard lacked standing to pursue a variety of claims on behalf of former Madoff customers.
Picard has estimated that Madoff's Ponzi scheme cost investors $17.3 billion of principal. Madoff pleaded guilty in 2009 and is serving a 150-year prison sentence.
As a result of the latest settlement, Picard has recovered almost $10 billion, according to his statement last week.
The Supreme Court will take no action on the pending case until the administration files its brief.
The case is Picard v. JPMorgan, U.S. Supreme Court, 13-448.