Prosecutors seek fund manager fine as Swiss Madoff trial begins

ZURICH (Reuters) - A fund manager accused of negligently funnelling client money to disgraced financier Bernard Madoff before the U.S. money manager's swindle was revealed faced a suspended fine rather than jail time as his trial in Geneva began on Monday.

Geneva prosecutors have charged Manuel Echeverria, the former head of Banco Santander's (SAN.MC) Swiss-based unit Optimal Investment Services, with mismanagement with intent to enrich. It carries punishment of up to five years in jail.

But they sought only a fine of 150,000 Swiss francs ($149,805) suspended for three years in the trial, which is set to run until Friday. Echeverria has denied wrongdoing via his legal team, according to media reports.

The unit of Santander, which fed billions to Madoff before his scam surfaced, agreed in 2009 to pay $235 million to a U.S. court-appointed trustee to settle the case.

The Santander settlement payment represented money withdrawn just before Madoff's fraud was revealed in late 2008. The trustee has been seeking the return of funds from big investors to reimburse other victims of the money manager, who used money from new investors to pay existing clients.

Swiss asset managers were among the biggest investors in Madoff's scheme, with firms based in Geneva particularly hard hit.

Five former Geneva wealth managers paid "substantial compensation" to settle criminal complaints brought by clients whose assets were invested by the managers with Madoff, the Geneva prosecutor's office said in September.

Madoff is serving a 150-year prison term in the United States after pleading guilty in 2009 to masterminding the Ponzi scheme, estimated to have cost investors $17 billion in principal.

In the United States, 15 people including Madoff either pleaded guilty or were convicted at trial in connection with the collapse of the scheme. The final Madoff defendant in the United States was sentenced to six months in prison in August.

(Reporting by Michael Shields and Joshua Franklin; Editing by Gareth Jones)