Aon faces first client lawsuits on Vesttoo collateral fiasco
Global re/insurance broker Aon may face a series of lawsuits from disgruntled clients alleging the broker failed to protect them from reportedly fraudulent collateral deals organised by alternative risk transfer and insurance-linked investment platform Vesttoo.
An unspecified count of clients and counterparties “have initiated or indicated that they may initiate” legal proceedings following word of investigations into possible fraudulent letters of credit on deals where capital had been arranged by Vesttoo, Aon acknowledged in its mid-year financial report.
Bermuda regulatory authorities have initiated investigations into the matter and other regulatory bodies could very well follow suit, management also warned.
Allegations of fraudulent collateral deals include “certain transactions” brokered or serviced by Aon, the brokerage admits. “The Company is actively investigating those allegations,” Aon management said.
“The pending or threatened legal proceedings against the Company allege, among other theories of liability, that in certain circumstances the Company failed to comply with its alleged duty to procure appropriate letters of credit,” management said.
“Aon believes that it has meritorious defences and intends to vigorously defend itself against these claims and to seek recourse against third parties where appropriate.”
Vesttoo has confirmed discovery of at least two transactions involving allegedly fraudulent letters of credit. Vesttoo said the disputed letters of credit used the name of China Construction Bank, which appears to have been unaware of the situation.
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
