Investec says it will defend itself vigorously against a legal case reported in the media yesterday about a private client investment that went wrong because it was exposed to the Bernard Madoff scandal in 2008.

The now deceased Johnstone Fletcher Britten contacted the firm in 2007 about moving his personal fortune to Investec Bank UK, according to Citywire. A chunk of it was invested in Absolute Alpha, which subsequently lost all its value because of its exposure to Madoff’s fraud.  

In December 2008, senior Wall Street figure Madoff was arrested and charged with running a Ponzi scheme, with early investors paid off with money from later investors - involving $50 billion of funds.

Investec denies the accusation and said in a statement that Britten sought with the benefit of hindsight to criticise the investment decision.

“Mr Britten was an experienced investor. The investments in his portfolio, including Absolute Alpha, were entirely appropriate to include as part of a portfolio for an investor with Mr Britten’s investment objectives, risk appetite and investment time horizon. It was Mr Britten that instructed Investec to increase the allocation to Absolute Alpha,” the bank said in a statement.