A US-based brokerage and two of its executives are facing a $100 million (£59 million) lawsuit over allegations that they played a ‘pivotal role in a major international fraud’, according to reports.
The Financial Times reported that Connecticut-based CRT Capital and two of its executives have been sued by the liquidator for SLS Capital, the company which issued life settlement bond which were marketed by Keydata.
CRT was an adviser to SLS and at one point owned 50% of its shares, the FT reported.
According to the paper the lawsuit, which is backed by 900 Keydata investors, alleges that CRT knew SLS’s marketing material was misleading and accuses the brokerage of fraudulently certifying that the bonds met a financial metric that they in fact did not.
CRT has not yet filed a defence to the claim, but told the FT: ‘We believe the claims SLS is pursuing against CRT Capital are wholly without merit. UK regulatory authorities have confirmed that David Elias misappropriated the assets of SLS Capital SA in 2008, months after CRT Capital’s advisory engagement with SLS was terminated.’
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SLS collapsed in 2009 after £103 million of investors’ money disappeared. The company was controlled by David Elias who reportedly died in May 2009. The Serious Fraud Office launched an investigation into both Keydata and SLS, but this was closed due to insufficient evidence.
Click here for a comprehensive look at the collapse of Keydata.