Insurance: Woodmen alleges US Bank misled it over investments.
Woodmen of the World, an insurance and mutual funds company, has filed a federal lawsuit seeking recovery of USD29.7 million in investments that U.S. Bank National Association lost in short-term investments managed by an affiliate of the bank.
Woodmen is extremely unhappy about the treatment it has received at the hands of US Bank National Association. Woodmen says that, without its knowledge, US Bank "invested a portion of the money in high-risk securities that were not the high-quality investments that Woodmen was led to expect."
And if its case is proved, it seems to have good reason to be upset: Woodmen says "In March 2008, Woodmen inquired about the safety of the investments. Although U.S. Bank knew otherwise, U.S. Bank nevertheless represented to Woodmen that these short-term investments were sound, according to the lawsuit. Only a few months later, U.S. Bank would perform an about-face and take drastic measures to dissolve" the fund, transferring the assets to an illiquid fund without Woodmen's consent, the suit says."
It goes on "At no time prior to July of 2008, and only after Woodmen was forced to sign a confidentiality agreement, did U.S. Bank inform Woodmen" that some of Woodmen's short-term investments had been placed in high-risk securities, the lawsuit says."
It's a lot of money, but relative to Woodmen's USD8,000 million under management, it's a tiny proportion. And Woodmen is not prepared to let it go without making efforts to get it back. The company says that it only issued the suit after US Bank refused to reimburse it, and that it is pursuing other avenues alongside the litigation.
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