National and MBIA Insurance File Lawsuit Against Wall Street Banks for Misconduct as Underwriters in Puerto Rico’s Fiscal Crisis
Plaintiffs are bond insurers that have been presented with, and fully honored, over a billion dollars in claims after the municipal debt underwritten by the banks became unsustainable on their terms for the Commonwealth and its agencies and they defaulted on their obligations. The lawsuit names as defendants
Each bank underwrote one or more bonds issued by each of the Commonwealth, the
This debt burden ultimately forced the Commonwealth from the municipal markets, leaving it and its public institutionsâlike power utilities, hospitals, schools, and essential infrastructure on which millions of Puerto Ricans relyâin financial distress. Bond insurers like National have paid billions of dollars in claims payments to date, while uninsured municipal bond investors, including many Puerto Ricans, have suffered huge losses.
"We are honored to represent National in this litigation," said
The Complaint is based upon two equitable doctrines of Puerto Rican lawâdoctrina de actos propios and declaraciĂłn unilateral de la voluntad.
According to Federico HernĂĄndez Denton, former Chief Justice of the
In the face of the bonds' defaults, National has paid every cent of every claim on its policiesâover a billion dollarsâto cover the losses of insured investors.
"Just like the Commonwealth, and the people of
"This time of turmoil should be the occasion for rebuilding. National insured its first
Retired Chief Justice of the
The Complaint is available here.
[i]Â "'The legacy of the banks' unjust conduct will affect |
|||||
[ii] "'Defendants through their acts assured National that they were conducting reasonable investigations regarding the terms of the bonds that National insured, and National relied on those acts in issuing its insurance. But Defendants frustrated National's legitimate, good faith expectations by choosing not to conduct those investigations and utterly failing to ensure that they had confirmed the truthfulness and completeness of the integral materials in the insurance applicationsâŠ.These extraordinary circumstances warrant application of doctrina de actos propios and/or the unilateral declaration of will.'" |
Â
SOURCE
AM Best Affirms Credit Ratings of Russian Reinsurance Company JSC
Bay Insurance Ensures Financial Backup During Medical Emergency with Health Insurance in Bradenton and Naples, Florida
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News