Insurer Woodmen of the World sues U.S. Bank over USD 29.7 million cash collateral reinvestment losses

Woodmen of the World has filed a federal lawsuit calling for the recovery of nearly USD 30 million lost through a U.S. Bank affiliate’s cash collateral reinvestment programme.

The case claims that U.S. Bank misinformed Woodmen about the securities that would be bought with the collateral.

Woodmen accuses the bank of breach of contract, negligence, breach of fiduciary duty, gross negligence, negligent misrepresentation, fraudulent misrepresentation and fraudulent concealment.

According to the filing, U.S. Bank invested some of the cash in high-risk securities, rather than the conservative investments that it had promised.

Woodmen also alleges that in March 2008, U.S. Bank wrongly informed it that the short-term investments were safe.

“Only a few months later, U.S. Bank would perform an about-face and take drastic measures to dissolve” the fund, moving the assets to an illiquid fund without Woodmen's consent, according to the suit.

Woodmen vice president of marketing and public relations, Steve Haack, commented: “The losses represent less than one half of 1% of Woodmen's nearly USD 8 billion in assets.

“But Woodmen is committed to the responsible management of member funds and filed the lawsuit in order to live up to that commitment.”