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Sir Keith Mills settles with Coutts over AIG bond dispute
by Annabelle Williams on Dec 12, 2012 at 16:56
Sir Keith Mills has agreed to settle his claim with Coutts & Co, bringing an end to a battle with the Queen’s bank over the sale of AIG life bonds.
Mills, who set up the Nectar card and Air Miles loyalty schemes, has agreed to settle with the bank for an undisclosed sum.
While the terms of the agreement have not been disclosed, previous reports suggested Mills was seeking damages in excess of £8 million.
Coutts said in a statement it was pleased to have come to an agreement with Mills.
'We confirm that we have reached a mutual settlement with Sir Keith Mills and are pleased to have resolved this issue,' a spokesperson said.
The case was brought to the High Court in London's Strand after Mills invested £65 million of his personal wealth plus £8 million from a family trust in AIG bonds.
Coutts sold the AIG Variable Enhanced Rate fund to 427 clients who had a combined £1.45 billion invested in the fund between December 2003 and September 2008.
As the Lehman's crisis unfolded, AIG shares took a sharp fall, causing a run on the fund. The value of the underlying investments in the fund were also badly hit by the events of 2008, and the vehicle was suspended in September of that year.
Some 247 clients, including Mills, saw their assets frozen within the fund. At the time clients were given the option to withdraw 50% of their capital and have the remaining 50% transferred into the new AIG Protected Recovery fund (PRF) to avoid a 13.5% haircut.
Investors that opted for the PRF rollover then saw their cash locked up in the vehicle for over three and a half years.
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