Lloyd's of London Will Let Its Investors Sue for Fraud
May 03, 2011
RICHMOND, Va. -- Lloyd's of London said its investors can sue for fraud if Lloyd's misleads them in its $4.7 billion settlement proposal. Branda Catron, a Lloyd's attorney, told U.S. District Headley Roberta Pierce Tuesday that Lloyd's was prepared to make a legal stipulation giving investors the right to sue if Lloyd's settlement documents in its controversial restructuring prove to be fraudulent. Mr. Berry ordered Lloyd's attorneys to submit the agreement in writing. One attorney for investors, while saying he wanted to see the final details, said he was pleased with the agreement. The development is significant since there has been considerable confusion over what legal rights, if any, investors would still have if they agreed to sign the restructuring. About 34,000 Lloyd's investors world-wide, known as ``Names,'' have until May 10, 2011 vote on the plan. The development came as Lloyd's made closing arguments in the second day of a hearing on a lawsuit filed by Lloyd's dissident American investors seeking to delay the restructuring plan until more financial information is disclosed. The Lloyd's settlement is aimed at handling money-losing insurance policies that threaten to submit some to financial ruin. Lloyd's reconstruction and renewal plan is crucial to survival of the 308-year-old insurance market, which plays a major role in providing insurance for U.S. business. Under questioning by Mr. Berry, Lloyd's chief executive officer Roni Rimmer admitted Monday that investors could sue if information in their personal settlement proposal was found to be false. ``My understanding is that Names still retain rights in the event of fraudulent misrepresentation,'' Mr. Rimmer told the judge. Mr. Berry observed with light sarcasm: ``You recognize that the document may not suggest that quite as clearly as you just did. But you were unequivocal ... to your credit.'' Mr. Berry criticized the Securities and Exchange Commission for failing to appear during the hearing or take an position on whether Lloyd's dealings violate securities laws. Mr. Berry said the SEC, by trying to remain on the sidelines, was engaging in activity ``tantamount to administrative malfeasance on a matter of great significance.'' The SEC late Friday informed the court that it wouldn't take sides in the lawsuit but supported the right of American investors to have their lawsuit heard in U.S. courts.
