UBS loses $40 billion in mortgages, then gets back-stopped by the Swiss Government, and now it has the audacity to attempt to shift the responsibility for the money it invested into Madoff on behalf of clients?
UBS seeks to absolve itself from need to safeguard Madoff funds.
UBS sought to absolve itself from any duty to safeguard investor assets in a $1.4bn fund that channelled money into Bernard Madoff's alleged $50bn Ponzi scheme.
The Swiss bank used an agreement that denied it was responsible for the assets - even though its marketing documents claimed it would be.
The move came as a US judge changed the terms of Mr Madoff's $10m bail, confining him to his New York apartment.
UBS's wording of subscription documents for the Luxalpha Sicav, a Luxembourg mutual fund registered for sale across Europe, may set it in conflict with the Luxembourg financial regulator. The Commission de Surveillance du Secteur Financer said: "The provisions of the sales prospectus are binding."
So-called feeder funds which invested their money with Mr Madoff are coming under increasing scrutiny.
As well as the Luxalpha fund, at least one other Madoff feeder fund was registered for sale in Europe. The Irish-domiciled $1.1bn Thema International Fund had HSBC as custodian.
Subscription documents for the Luxalpha Sicav explicitly remove UBS's liability if the fund's assets are lost. Under European rules, custodians such as UBS must take responsibility for "safekeeping" of a regulated mutual fund's assets. But the Luxalpha subscription form states that UBS "is not the safekeeping agent of the assets of the fund as the assets are safekept by the US registered broker-dealer".
UBS acted as manager, custodian and administrator of Luxalpha until this year, when Access Management - thought to be part of New York's Access International Advisors - took over. Four of the six directors of the fund still work for UBS, according to the latest prospectus.
UBS said it could not comment on Luxembourg law, but said: "We established fund of fund structures on clients' request. Bernard Madoff was not on the bank's wealth management recommended list as a direct investment option." Mr Madoff not only acted as manager of assets - never mentioned in the Luxalpha documents - but also insisted on being custodian and broker.
HSBC confirmed it acted as custodian to several Madoff funds but said it "does not believe that these custodial arrangements should be a source of exposure to the group".