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New Zealand investors appear to have little exposure to the alleged US$50 billion ($91 billion) Bernard Madoff fraud but the full impact may not yet be known as companies race to check their investments.
Yesterday Man Group, the world's largest listed hedge fund manager, and global banking giant HSBC confirmed they had been hit by the worldwide scandal. Both operate in New Zealand.
A spokeswoman for Man Investments, the Australian division of the Man Group, confirmed the company had US$360 million in funds directly or indirectly subadvised by Madoff.
But she said the exposure would have little impact on Man's retail investors in New Zealand and Australia.
"It affects three of the 33 funds we have and the impact is less than 1 per cent."
The exposure would mainly affect the Man Group's large institutional investors, of which it did not have any in New Zealand, she said.
Man Investments manages A$7 billion across Australasia.
HSBC also confirmed it had one of the largest exposures to the scam revealed so far with US$1 billion thought to be at risk.
In a statement to the London, New York and Hong Kong stock exchanges, HSBC said its involvement had come through providing finance to a small number of institutional clients who invested in funds with Madoff.
A New Zealand spokeswoman said HSBC was not prepared to give out any more details and she could not confirm whether any New Zealand institutional investors were affected.
Other New Zealand investment firms and banks were quick to state their positions.
A spokesman for Westpac said it was not aware of any direct exposures.
ANZ also confirmed it had no exposure.
Peter Lynn, head of investment strategy for Tyndall Investment Management, which uses some hedge fund investment in its superannuation scheme, said it "categorically" had no exposure.
Likewise, Tower Investment chief Sam Stubbs said it had "not a dollar" exposed.
New Zealand Absolute Return Association chairman Anthony Limbrick described the alleged fraud as a "seismic" event for the industry which could shake up the way third-party lending was conducted.
Limbrick said he had been shocked at the big-name institutions caught up in the affair.
The list of those affected is growing by the day and so far includes the Royal Bank of Scotland, Japan's Nomura Holdings and France's Natixis and BNP Paribas as well as a charity set up by the Hollywood director Steven Spielberg and dozens of Jewish organisations.
