NU Online News Service, March 22, 2004, 5:48 p.m. EST – State insurance commissioners are suing Bear Stearns & Company Inc., New York, in connection with the collapse of insurers once owned by Martin Frankel.[@@]
Bear Stearns was not immediately available for comment.
The commissioners, who are seeking more than $200 million in damages, are alleging that Bear Stearns had a duty of reasonable care, including a duty to “know its customer” and “not allow transactions that were not of the sort in which the particular customer would normally be expected to engage or that were contrary to the stated investment purposes of the customer.”
The commissioners allege that Bear Stearns failed to take sufficient action to uncover what they call “money laundering” by Martin Frankel.
The state insurance commissioners’ suit follows a federal suit filed by Bear Stearns that asks the court to find that the brokerage house was not tied to the collapse of the insurers owned by Frankel.