Comment from internet fraud lawyer Steven Philippsohn.
The report of Lord Penrose into the circumstances of the near-collapse of Equitable Life has found that the difficulties faced by Equitable Life were brought about by incompetent management and non-executive directors who knew nothing about the company. The life insurer hit financial trouble three years ago when it was forced to pay high guaranteed annuity rates set in the 1970s and 1980s. The Penrose report primarily blames the management of Equitable Life for the problems aided by the failure of regulators to understand the company’s perilous financial position.
<br><br>
The current management of Equitable Life are reportedly suing 15 former directors of the company in a £3.2bn negligence claim. They are also pursuing Ernst & Young, the company’s former auditors, for failing to advise the life insurer about the financial state of the company. It is also reported that the board are considering whether to issue proceedings against the firm’s regulator, the FSA. This approach has recently been seen in the ongoing BCCI litigation.
<br><br>
When considering litigation, it is important to look at all possible targets. Directors may be liable for failing to carry out their duties with sufficient diligence. Auditors may be liable for failing to check the accounts properly. It may also be possible to recover from regulators if they commit a misfeasance in public office.
