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California Agency Sues Lloyds, Seeks to Put Freeze on Account

February 23, 1996|From Reuters

The California Department of Corporations, the state agency governing businesses, said Thursday that it filed a lawsuit against giant insurance underwriter Lloyds of London.

California officials also said they are seeking a freeze on the insurance underwriting group's account.

According to the lawsuit, filed in Los Angeles County Superior Court, California officials alleged Lloyds defrauded more than 500 investors by selling securities in its underwriting syndicates without telling investors the syndicates might suffer losses.

The department is asking the court to issue a temporary restraining order prohibiting Lloyds from drawing down letters of credit posted by investors.

The department is also seeking to freeze a Lloyds' Citibank account with more than $10 billion to set up a constructive trust that can be used to repay the investors.

A spokesman for Lloyds could not be immediately reached for comment.

The lawsuit, filed late Wednesday, alleges that as early as 1970, Lloyds knew that its syndicates could expect "massive and unquantifiable future liability in pollution and asbestos contamination cases."

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