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Some UCITS funds have been caught in the turbulence following the Madoff scandal. The Commission and CESR will review the implementation of the Directive concerning the responsibility and liability of the depositaries.
To the extent that this review identifies practices or outcomes that are not consistent with the over-arching principles of the Directive, it will take the necessary steps to correct shortcomings. At this stage, a number of options could be envisaged – ranging from legally binding clarification of the responsibilities implied by asset safe-keeping supported by convergence of national practice, to more far-reaching legislative harmonisation.
The incident has nevertheless revealed differences in the way that the requirements of the Directive are given expression in national law. It has revealed different expectations as to whether the depositary is required to keep assets under its control so as to be able to return them to investors, or whether its responsibilities are confined to monitoring the security of the assets. It also suggests differences as to where the burden of proof lies in establishing responsibility and liability.