Missing Sales Estimates, Standard Life Blames Corporate Pensions

(November 2, 2011) — British insurer Standard Life has revealed that it has missed sales growth expectations, largely blaming the shortfall on corporate pension schemes.

According to the insurer, its shortfall came as a result of corporate pension fund decisions to remain with existing providers rather than switch. “Pension scheme trustees when they see a lot of volatility tend not to move schemes,” Standard Life finance director Jackie Hunt told reporters on a conference call, according to Reuters. “They don’t want to be out of the market even for a couple of hours.”

Scotland’s largest insurer revealed that sales role 10% in the first nine months of the year, missing estimates.

Chief executive David Nish commented: “The third quarter saw very challenging conditions in global financial markets which have impacted values of assets and customer confidence, reducing the pace of fund flows…Although the economic backdrop continues to be uncertain, the outlook for our business is positive and we are confident in the future growth opportunities in our chosen markets.”

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In October, hoping to recover its value following the collapse of Lehman Brothers, Standard Life sued 11 of its insurers who refused to pay a claim related to a cash injection into one of its pension funds. In a court hearing earlier, Sandy Crombie, Standard Life’s former chief executive officer and chairman, testified, noting that the company’s response to the losses was motivated by a desire to do “the right thing.” Last year, Standard Life was fined £2.45 million by the Financial Services Authority (FSA), which said it had misled investors.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

A New York City judge has tossed out a $19 billion claim that a trustee seeking money for Bernard Madoff's investors demanded from JPMorgan Chase, which had been the Ponzi schemer's bank.

(November 2, 2011) — A federal judge has thrown out the majority of a $19.9 billion lawsuit against JP Morgan Chase & Co — which had been Bernie Madoff’s main bank for two decades — along with a $2 billion case against UBS AG.

The move comes as a setback for the trustee, Irving Picard, who has spent nearly three years liquidating Bernard L Madoff Investment Securities LLC. US District Court Judge Colleen McMahon in Manhattan stated that Picard had no power to pursue common law claims against the banks, saying such claims properly belong to former Madoff customers, Reuters reported.

“Practically, giving the trustee the power to pursue claims on behalf of creditors would usurp the creditors’ right to determine whether and in what forum to vindicate their legal injuries,” Judge McMahon wrote. Picard concluded that through its connections to funds that fueled the Ponzi scheme, JP Morgan and UBS had both overlooked warning signals about the fraud.

In a statement, JPMorgan said the firm is “pleased that Judge McMahon agreed with our arguments and has dismissed all of the trustee’s common law claims for damages.”

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Since Madoff’s Ponzi scheme collapsed on December 11, 2008, Picard has filed about 1,050 lawsuits on behalf of former Madoff customers, with the JPMorgan lawsuit being his second-largest. In August, Picard filed a lawsuit against Abu Dhabi’s sovereign-wealth fund seeking to recover $300 million. The lawsuit marked the first time Picard targeted a sovereign wealth fund in the scandal.

However, unlike many other lawsuits that Picard has filed in the past year, the claim against the Abu Dhabi Investment Authority (ADIA) did not allege that the sovereign wealth fund’s managers knew or should have known that Madoff was a fraud. Instead, the suit claimed that ADIA invested in Madoff’s massive Ponzi scheme through the Fairfield Sentry hedge funds, withdrawing $300 million in 2005 and 2006. A trustee can seek the return of money withdrawn in the six years before a business collapses, according to US bankruptcy law.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742