General American Liquidators Proceed with Lawsuit Against Morgan Stanley

September 20, 2004

Missouri Department of Insurance Director Scott Lakin, as liquidator for General American Mutual Holding Co. (GAMHC), has filed a lawsuit in St. Louis City Circuit Court alleging Morgan Stanley & Co. investment banking firm had conflicts of interest that damaged the value of the insurance holding company.

The lawsuit alleges Morgan Stanley, which had been under contract to advise General American on an initial public stock offering and other matters, is responsible in part for the 1999 liquidity crisis of General American, which led to the sale of its assets at reduced prices to MetLife in January 2000.

The lawsuit maintains that, based on Morgan Stanley’s own assessment, General American lost $1 billion in actual value as a result of that crisis, and it seeks up to another $3 billion in punitive damages as well as a return of the fees paid to Morgan Stanley.

With the litigation, Lakin and special deputy liquidator Albert Riederer are fulfilling their legal responsibility to recover all amounts owed to the previous owners of GAMHC, who were the policyholders or “members” as of Jan. 5, 2000.

The final distribution of assets to the members of GAMHC will occur after the Morgan Stanley case is concluded.

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