Monday 22 January 2018

Anglo Irish faces securities fraud claims

John Mulligan

Anglo Irish Bank is one of the defendants being accused of securities fraud and a breach of fiduciary duty by a firm claiming the now state-owned institution was actively involved in the selling of with-profit bonds in California that subsequently lost value despite being pitched as guaranteed.

Amethyst Worldwide, a firm controlled by 73-year-old doctor Berenice Kaplan, said it diverted $2.5m (€1.8m) of funds to the bonds, or guaranteed funds, in 2001 only to find that when they matured in 2009 the investment resulted in a $1.3m loss. Dr Kaplan had been recently widowed and wanted a secure source of income for the rest of her life and for her two daughters when she invested.

Court documents filed in Los Angeles also name Scottish Mutual and Clerical Medical among the defendants. Amethyst claims that Stewart Davies, who was at the time managing director of Anglo Irish Bank's operations in the Isle of Man, acted in concert with a firm called PrimeGlobal to market the with-profit bonds.

The complaint alleges that Mr Davies "specifically represented in meetings with plaintiffs and their family members in or about November 2000 that Scottish Mutual had issued guaranteed funds for more than 100 years and no one had ever lost money on them, and that even under the worst-case scenario involving leveraging, the investor was guaranteed not to lose any of his principal".

The complaint continues: "While ultimately plaintiffs did not use Anglo Irish Bank for leveraging its guaranteed funds, it was in part as a result of their meeting with Davies and statements he made during that meeting confirming what had previously been represented about the investment, that the Turquoise Trust decided to invest in Scottish Mutual and Clerical Guaranteed Funds in March 2001."

Funds from the Turquoise Trust are the sole asset of Amethyst Worldwide.

A similar case taken by other investors in so-called guaranteed funds in the US against defendants including Anglo Irish and Mr Davies was dismissed with prejudice in 2009.

Irish Independent

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