EXPOSURE to the Madoff fraud in the US has been limited to a small number of investment vehicles in the island, according to the Guernsey Financial Services Commission.

Director-general Peter Neville (pictured) said it had been contacting banks in Guernsey to determine whether there was any direct or indirect exposure in subsidiaries or branches and the response to that survey was expected shortly.

‘The commission is analysing reports from the entire investment sector here.  Those reports cover both direct and indirect exposure to Madoff, where investors have invested in funds of hedge funds which in turn have led to the vulnerability.

‘Early indications are that exposure is limited to a relatively small number of investment vehicles.’

The alleged Bernard Madoff fraud, which has cost $50bn, has hit some of the world’s biggest banks.  He was arrested last Thursday and if found guilty could face up to 20 years in prison and a fine of up to $5m.

But the number of investors reporting potential losses is growing by the day and already include HSBC, Spain’s largest bank Santander and Royal Bank of Scotland.