Today's post was shared by WorkCompCentral and comes from daviddepaolo.blogspot.coJust as California's State Compensation Insurance Fund was rebounding from the Unicover induced crisis in the workers' compensation market, which forced SCIF to protect more than 50% of the market by year 2000, the monolithic carrier succumbed to enticing bond purchases that was part of the precipitous mortgage backed securities debacle that plunged the country into the worst recession in history by 2008.
Insurance companies routinely invest in bonds because they are relatively safe investments and not generally subject to the vagaries of the market - they are fixed income securities upon which an investor can usually expect the represented return of both interest and the underlying capital.
SCIF alleged in a 2011 federal lawsuit that financial services giant Lehman Brothers misrepresented the risk associated with more than $85 million in investment bonds the Fund purchased between 2004 and 2008.
Those bonds, which were to mature between 2010 and 2014, were allegedly sold in 2009 for $19 million.
The carrier just recently dismissed from that lawsuit three Lehman executives it alleged steered the brokerage into selling these misguided investments all the while misrepresenting to customers, SCIF and others, the true extent of the firm's financial degradation and concealing the worthlessness of the mortgages underlying the purchased bonds.
WorkCompCentral's Mike Whiteley reports this morning that a joint stipulation filed in U.S. District Court for the Southern District of New...
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