A group of investors, whose bid for Executive Life was rejected in favor of Credit Lyonnais’ offer, have filed suit in L.A. Superior Court against the French Bank seeking $2 billion in damages for alleged fraud.
The suit is the latest in a series of ongoing litigation and investigation by both state and federal governments into how CL acquired Executive’s junk bond portfolio at a firesale price, while transferring its insurance operations. The controversy is focused on whether the government owned bank retained too much control over its subsidiary, Altus Finance, and whether it made a secret deal with the companies controlled by French billionaire François Pinault to share profits from the deal.
The civil suit seeks to recover the profits that have been made, alleging that since the takeover arrangement was fraudulent, their group should have been the successful bidder. However, in a suit filed last February the Insurance Commissioner’s office, then headed by Chuck Quackenbush, claimed that the State of California should recover those profits.
So far neither the Insurance Commissioner nor CL has commented on the new lawsuit.
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