Monday, 07 December 2009 19:00

So, being collectively stupid is not a crime???

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From Bloomberg :

Dec. 8 (Bloomberg) -- Managers and board members at financial firms shouldn’t be sued for underestimating the subprime mortgage crisis, said the chief executive officer of XL Capital Ltd., which insures directors and officers.

“It’s very hard to pick out the management team that did something wrong to the level that the law requires,” Michael McGavick said today at a Goldman Sachs Group Inc. conference in New York. “Being collectively stupid is not a basis for a lawsuit.”

U.S. securities class action suits climbed to a four-year high in 2008 with almost half of the 210 claims related to the collapse of the subprime mortgage market, according to a report by Stanford Law School and Cornerstone Research. Investors are seeking to recoup losses from a crisis that contributed to more than $1.7 trillion in writedowns and credit losses worldwide.

XL is among insurers, including Ace Ltd. and Chubb Corp., that sell coverage for lawsuit costs tied to management negligence or misleading statements. The Bermuda-based insurer and reinsurer said claims rose in its professional liability business in 2008 as the pace of lawsuits increased.

 

 

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Reggie Middleton

Resident Contrarian Badass at BoomBustBlog (you can call me Editor-in-Chief)...

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