Tricolor’s Bondholders Sue Trustee for Missing Alleged Fraud (3)

Investors in bonds from Tricolor Holdings, a used car dealer and subprime lender that collapsed last year amid allegations of fraud, sued Wilmington Trust NA, the trustee for the securities, alleging the firm failed in key bond supervision duties.

The bondholders filed the suit in New York state court Tuesday. The filing came the same day that Tricolor founder Daniel Chu and former Chief Operating Officer David Goodgame pleaded not guilty to charges that they conspired to defraud lenders and investors.

The discovery last year of the alleged widespread fraud inside Tricolor’s book of subprime auto loans instantly ...