PricewaterhouseCoopers Ireland (PwC) has
been named among the defendants in a class action suit filed in the
US against a hedge fund unit of Santander. The fund lost €2.33
billion ($3.09 billion) in client funds in the alleged Ponzi scheme
run by Bernard Madoff.

The suit against the investment arm of one of the Spanish bank’s
hedge funds, Optimal Investment Services, has been launched by
lawyers representing two Latin American investors.

The PwC filing is the latest in a series of lawsuits against
audit firms related to Madoff’s alleged $50 billion Ponzi scheme.
The suits may fuel doubts about increasing integration between
professional services firms.

The class action, which named PwC as Optimal Fund’s auditors,
said: “PwC had failed to perform its annual audits of the financial
statements and financial condition of the Optimal Fund and Optimal
SUS in accordance with professional standards applicable to those

PwC Ireland said it would not comment on client matters.

In December last year, several US hedge funds that lost money
invested in Bernard L. Madoff Investments Securities (BMIS)
considered suing audit firms for failing to detect the fraud. KPMG,
Ernst & Young and BDO Seidman all audited feeder hedge funds –
funds that were not part of BMIS but had significant amounts
invested with Madoff.

KPMG said at the time that its work conformed to all
professional standards. Ernst & Young declined to comment.

Late last year, BDO Seidman was also named in a case brought
against Ascot Partners fund. A statement from BDO Seidman at the
time said the firm was not and had never been the auditor of Madoff

“BDO Seidman’s audits of Ascot Partners and Gabriel Capital
conformed to all professional standards and we will vigorously
defend ourselves,” the statement said.

Nicholas Moody