Ethics and governance in the European Financial centers

The Luxembourg regulator yesterday published a press release about the Madoff case.

The wording is worth commenting :

(...)
The CSSF would like to stress that the Luxembourg law applicable to Luxembourg based depositary banks in their role of safe-keepers of investment funds' assets reflects faithfully the provisions of the European Council Directive 85/611/EEC
(...)
the Commission does not limit its analysis to the depositary banks concerned but verifies that all the other parties involved with the funds concerned have acted with the diligence imposed by Luxembourg law
(...)


What kind of law ? The law that is presented officially as clear and Prag-mac-tic, the fetish word.


This is for instance what Luc Frieden wrote in 2004 (Cf. article « The art of Communication », Fundlook, july-september 2004, page 3) : "I want to ensure that Luxembourg remains a leading player in the world of investment funds. Based on clear and pragmatic legal rules that are fully compliant with the EU legal framework as well as on the unique international experience built up over the past decades, the Grand-Duchy of Luxembourg will continue to undertake every effort to develop Luxembourg as the European hub for investment funds both for European and non-EU financial operators."

Pragmatic means that the actual enforcement in the jurisdiction is at least perfectible as there are many red flags that demonstrate a lax jurisdiction.

Quod erat demonstrandum with the Madoff case .