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Madoff Scheme May Halve Chilean Bank Celfin’s Profit

Date: Monday, December 22, 2008
Author: James Attwood, Bloomberg

Celfin Capital SA, the Chilean brokerage that manages about $4 billion in assets, may see its 2008 profit cut in half on losses from investments in funds controlled by alleged U.S. fraudster Bernard Madoff.

“It has a significant impact,” Celfin Chairman Juan Andres Camus said in a telephone interview from Santiago today. “Possibly our profits are going to be reduced by half.”

Santiago-based Celfin joins a list of investors ranging from Spain’s Banco Santander SA to Steven Spielberg’s Wunderkinder Foundation that face losses from what’s being called the largest investment fraud in history. Madoff was arrested Dec. 11, accused of masterminding a $50 billion Ponzi scheme.

Celfin is refunding about $10 million to clients in potential losses from the investments, Camus said, confirming information published in newspaper El Mercurio on Dec. 20.

The brokerage is seeking to recover the losses through legal channels, Camus said. He declined to say how the firm invested in the Madoff-controlled funds or how many of its clients were involved.

The losses come after Celfin fired as much as a 10th of its workforce this quarter amid an economic slowdown stemming from the global credit crunch.

“We expect to have a somewhat better year next year,” Camus said.

To contact the reporter on this story: James Attwood in Santiago at jattwood3@bloomberg.net