Hedge Funds Scandal

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Two major European banks said they have exposure worth billions of dollars to a US broker accused of a $50bn (£33bn) Wall Street fraud scheme.

Spain's largest bank, Santander, which also owns three UK banks, said one of its funds had $3.1bn invested in the firm run by Bernard Madoff.

France's BNP Paribas estimated its exposure to be more than $460m.

Mr Madoff has been charged with fraud, in what is being described as one of the biggest-ever such cases.

Correspondents say the case is likely to fuel uncertainty about the entire hedge fund industry.

'Systemic failures'

Mr Madoff is alleged to have used money from new investors to pay off existing investors in the fund.

Investors are assessing their exposure to the alleged fraud Mr Madoff is said by prosecutors to have confessed to.

US Prosecutors say Mr Madoff, a former head of the Nasdaq stock market, masterminded a fraud of massive proportions through his hedge fund and investment advisory business.

source: BBC