Even though reports indicate French bank Credit Lyonnais is attempting to settle fraud charges related to its unsuccessful purchase of Executive Life Insurance Co., a number of high-ranking California officials are seeking strong action be taken by the U.S. government in the matter, according to a Reuters report.
In a letter to U.S. Attorney General John Ashcroft, both California Attorney General Bill Lockyer and Insurance Commissioner Harry Low, indicated that any deal the company would be allowed to make would lessen the severity of the company’s alleged misconduct that impacted hundreds of thousands of policy holders.
The state imposed a $2 billion lawsuit for both the bank and its affiliates last summer, claiming that the company and other investors acted with negligence in its plans of purchasing Executive Life’s assets at an artificially small price.
The Reuters report goes on to say that the arrangements allegedly were in violation of both California and federal banking and securities laws, not to mention state insurance laws that make it illegal for foreign governments to own California insurance companies.
In the lawsuit, it is alleged that approximately 300,000 policy holders lost out on major profits that could have been obtained had the sale gone through minus the alleged illegal secret deals.
Prior to being seized in 1991 by the California Department of Insurance, Executive Life was one of the major life insurance companies in the country. A collapse of the junk bond market resulted in the company selling off a bond portfolio reported to be worth greater than $6 billion.
It is also reported that U.S. Justice Department officials are taking a look at a recommendation from the U.S. Attorney located in Los Angeles to bring criminal charges against the bank.
However, reports claim the proposed deal being considered would amount to a fine in the area of $50 million to $100 million, which would include not seeking an indictment against the bank.
Topics California USA
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