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Great-West Lifeco Must Pay $456 Million In London Life Class Action
This is a settlement for the Securities/Stock Fraud lawsuit.
Winnipeg, MT: Canada's Great-West Lifeco must pay $456 million to more than a million policyholders as a result of a ruling by the Ontario Superior Court of Justice in a class-action lawsuit over the financing of the acquisition of London Insurance Group nearly 13 years ago.
The decision pertains to the involvement of the participating accounts of its subsidiaries -- London Life Insurance Co. and Great-West Life Assurance Co. -- in the financing of the acquisition of London Insurance Group in 1997, Great-West Lifeco said in a statement.
The court ruled that Great-West breached sections of the Insurance Companies Act by transferring money from the accounts of London Life Insurance and Great-West Life Assurance to pay for the acquisition of London Insurance, parent of London Life.
The ruling is significant because the court is delving into the way the defendant company functions and into investment decisions, and could have far-reaching implications for all investment banks, stock brokerage firms, investment holding companies and possibly mutual funds because the court is examining the propriety of an investment.
A spokesperson for Great-West Lifeco declined to comment beyond the company's statement. The companies plan to appeal the decision. "Although the decision confirms in many respects the companies' position, there are significant aspects of the decision that the companies believe are in error," Lifeco said.
The decision, if upheld, would require that the companies pay the $456 million to the participating accounts, which include interest. London Life would be required to pay $372 million and Great-West Life would be required to pay $84 million. "The decision, if sustained on appeal, is not expected to have a material impact on the capital positions of the companies," Lifeco said.
Published on Oct-5-10
The decision pertains to the involvement of the participating accounts of its subsidiaries -- London Life Insurance Co. and Great-West Life Assurance Co. -- in the financing of the acquisition of London Insurance Group in 1997, Great-West Lifeco said in a statement.
The court ruled that Great-West breached sections of the Insurance Companies Act by transferring money from the accounts of London Life Insurance and Great-West Life Assurance to pay for the acquisition of London Insurance, parent of London Life.
The ruling is significant because the court is delving into the way the defendant company functions and into investment decisions, and could have far-reaching implications for all investment banks, stock brokerage firms, investment holding companies and possibly mutual funds because the court is examining the propriety of an investment.
A spokesperson for Great-West Lifeco declined to comment beyond the company's statement. The companies plan to appeal the decision. "Although the decision confirms in many respects the companies' position, there are significant aspects of the decision that the companies believe are in error," Lifeco said.
The decision, if upheld, would require that the companies pay the $456 million to the participating accounts, which include interest. London Life would be required to pay $372 million and Great-West Life would be required to pay $84 million. "The decision, if sustained on appeal, is not expected to have a material impact on the capital positions of the companies," Lifeco said.
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