U.S. Bank Sued by Insurer Over $47M Loss
Minneapolis-based U.S. Bancorp has been sued by Omaha, Nebraska-based insurance company Woodmen of the World over $47 million that it lost from investments made by a trust controlled by the bank.
According to court documents, which were filed last week in Delaware Chancery Court, U.S. Bank breached its fiduciary duties through the management of a trust that Woodmen invested in.
Specifically, Woodmen claims that U.S. Bank made reckless and negligent investments in asset-backed commercial paper and mortgage-backed securities through the trust, and it also failed to disclose information to Woodmen once those investments turned sour.
“[U.S. Bank] either withheld information from or deliberately misinformed plaintiff about the nature of and condition of the trust's investment such that plaintiff was unable to make informed decisions for itself that would have permitted it to withdraw its investment or avoid or limit its losses,” the suit claims.
Woodmen also claims in the suit that U.S. Bank took steps to protect its own beneficiaries but took no steps to protect other beneficiaries. Woodmen said that the losses cannot be fully blamed on economic conditions.
“As a direct result of this wrongful favoritism, [Woodmen] lost approximately $47 million that it had invested in the trust.”
Woodmen is seeking $47 million in damages and attorneys fees and costs.
“[U.S. Bank] believes strongly that we acted properly in the management of the customer's portfolio and performed our services in accordance with our prescribed duties,” Steve Dale, a spokesman for the bank, told Twin Cities Business on Friday. Dale said that U.S. Bank will vigorously defend itself against the litigation.
U.S. Bank is a subsidiary of Minnesota's largest bank-holding company, Minneapolis-based U.S. Bancorp, which had $308 billion in assets as of December 31, 2010.