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'Death bond' fund investor battle intensifies

EEA Life Settlements accuses David Trinkwon, founder of pressure group for investors, of acting against their interests.

'Death bond' fund investor battle intensifies

As a legal battle in the US rumbles on, the embattled death bond fund EEA Life Settlements has hit back at the founder of a pressure group for investors over his support for the company suing it.

In a letter published on its website, EEA Fund Management has accused David Trinkwon, coordinator of the EEA Investors' Group, of acting against the interests of investors in the fund.

This is in relation to a lawsuit brought against EEA by Coventry Capital, a Philadelphia-based life settlement broker, which alleges that EEA thwarted its efforts to buy the company’s portfolio of life settlements following a ‘pattern of fraudulent, bad faith conduct’.

Coventry Capital is seeking damages in excess of $40 million (£28.2 million), in addition to any court order that may require EEA to negotiate a sale exclusively to the firm.

At 29 September 2017, the fund held 119 life insurance policies with a total net death benefit of $428 million (£302.5 million).

According to the latest exchanges between EEA and the investors group, there is strong disagreement over the impact of the lawsuit on shareholders.

EEA has claimed that the allegations against it are without merit and it has sought to file a motion to dismiss the case. The asset manager has also said that it is incurring significant legal costs, which ‘are likely to have increased as a direct result of’ Trinkwon’s intervention.

Meanwhile, Trinkwon has responded by saying ‘it is totally unacceptable for any company to refuse to tell its shareholders how they might be affected by a lawsuit’, highlighting that he has not received a response on whether costs would be charged to the account of the fund manager or the fund’s investors.

He has also asked the board that the fund desist from filing a motion to dismiss, as the investors' group wants ‘the very serious allegations to be heard and determined in court rather than to be swept under the carpet by EEA’.

However, EEA has responded to Trinkwon’s claims, saying: ‘It has come to our attention that the ‘co-ordinator of the UK-based EEA Investors' Group, which purports to be established to ‘improve outcomes for investors’, has been corresponding directly with lawyers acting for Coventry Capital in relation to the complaint.

‘It is remarkable that, despite the obvious harm that the claim by Coventry Capital may cause to the fund, the group not only supports but also offers assistance to Coventry; this is entirely inconsistent with the group’s purported objective of furthering the interests of investors in the fund.’

The EEA Life Settlements fund suspended redemptions back in 2011. Between 2005 and 2011, it is estimated that it took in around £600 million from investors. 

Since its suspension however, it has been returning money to trapped investors on a regular basis, with the latest distribution totalling £4.3 million. The investors' group has asked the company to sue the fund manager for mismanagement. The latest letter states that the group is also considering formal complaints against auditor Grant Thornton for possible shortcomings in the period between 2012 and 2016.  

Back in December, Trinkwon said holders of more than 870,000 continuing shares valued at more than $90 million (£67.5 million) were yet to request redemption and could miss the chance to get their money back.

1 comment so far. Why not have your say?

Anonymous 1 needed this 'off the record'

Feb 07, 2018 at 19:32

You neglected to mention that "the Fund reserves its rights against [Trinkwon] in full".

As an investor in the fund who disagrees vehemently with his actions, so do I.

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