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Scott Jagow: It’s bad enough that people lost billions of dollars because financial companies made awful decisions. But some people were flat-out defrauded by someone they trusted. That someone is Bernard Madoff, the former chairman of NASDAQ. His arrest last week for running a Ponzi scheme has opened a Pandora’s Box of stories. A charity in Boston fired its whole staff because their money was invested with Madoff. New Jersey Senator Frank Lautenberg entrusted his family’s foundation to this man.

And today in Europe, there was more fallout. Well-respected banks came forward and admitted they were duped. Our European correspondent Stephen Beard has more.

Stephen Beard: Britain’s Royal Bank of Scotland, Santander in Spain and the French bank BNP Paribas are now on the list of potential victims. They or their clients stand to lose more than $4 billion. One of the world’s biggest banks, HSBC, is another possible casualty to the tune of $1 billion. Many British-based hedge funds have also been affected.

One of London’s best-known money managers, Nicola Horlick, had 9 percent of her fund invested with Madoff. Speaking to the BBC, Horlick attacked the U.S. regulators:

Nicola Horlick: It’s very difficult for people to invest in things that are meant to be regulated in America, because they have fallen down on the job. And you know this is all through the credit crunch that this has been apparent. And this is the biggest scandal probably in the history of the markets.

She claims that the Securities and Exchange Commission investigated Madoff twice in recent years and gave his firm a clean bill of health.

In London, this is Stephen Beard for Marketplace.