Exit Madoff, enter the global ponzi scheme fraudsters

Prosecutors contend that in August, Nemazee drew down $75 million from a $100 million line of credit he had gotten from HSBC to pay off a loan his company had gotten from Citigroup.

In the wake of the indictment, HSBC filed a civil lawsuit against Nemazee claiming it was the victim of “an elaborate scheme to deceive HSBC into believing that its loan was secured by collateral, in the form of United States Treasury Notes, when it was not.”

HSBC long has had a good reputation in financial circles for doing due diligence and sniffing out potential scams.

Maybe it’s time to reassess whether that reputation is still warranted.

Maybe it’s just a coincidence, but soon after this column was posted the website for Risk Reward Ltd., a London based consultancy firm was disabled. CEO Dennis Cox did not respond to an email seeking comment.

On November 13, however, I got this comment from Lisette Mermod, Risk Reward’s commercial director: “All of our client relationships are based upon confidentiality which preclude our discussing any matters regarding any client relationships.”

Goldstein is a Wall Street investigative reporter for Reuters