Lehman Subsidiary Must Face Conn. Law Action Over Trust Assets

The New York Supreme Court Appellate Division July 30 refused to dismiss Aetna Life Insurance Co.'s(AET) claims that Lehman Brothers Holdings Inc.'s wholly owned asset management subsidiary improperly removed from a trust account held for Aetna’s benefit $48.65 million worth of “high-grade securities” and replaced them with “toxic” subprime-mortgage-backed securities (Aetna Life Ins. Co. v. Appalachian Asset Mgmt. Corp.).

Judge David B. Saxe held that Aetna pleaded sufficient facts to pursue claims against Appalachian Asset Management Corp. and individual defendants for violations of the Connecticut Unfair Trade Practices Act, breach of fiduciary duty, negligence, and recklessness.

$44M ...