UBS AG and Ernst & Young LLP may face hundreds of damages claims if investors who lost millions of dollars in mutual funds linked to Bernard Madoff's Ponzi scheme win a group of Luxembourg test cases.

Private and institutional investors who lost money through Access International Advisors LLC's LuxAlpha Sicav-American Selection are suing UBS and Ernst & Young for "seriously neglecting" their supervisory duties of the fund. A Luxembourg court will decide in hearings that started Wednesday whether investors have the right to bring direct claims against the fund's custodian and auditor.

"These cases are very important," Pierre Reuter, who represents clients in six of the lawsuits being reviewed over four days of hearings, said by telephone before the hearing. "They could set the course for some 100 pending cases and many more to come."

The cases will review whether investors who used an intermediary bank to place their money with the now-defunct fund can be considered shareholders.

"The problem we're facing is that people almost never directly buy into these funds, they do it through their bank," Francois Brouxel, a lawyer mainly representing French investors in the cases, said before the hearing. "The liquidators only recognize one entity as shareholder, and that's the one listed on the official register, in this case the bank, not the investor."

UBS has previously said that LuxAlpha's fund documentation contained an explicit waiver that "made it very clear that UBS (Luxembourg) SA was not expected to be responsible for the safekeeping of the assets."

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