MBIA Gutted Insurance Unit, Investors' Suit Says

Law360, New York (November 9, 2012, 9:22 PM EST) -- Investors on Thursday hit financial services company MBIA Inc. and two subsidiaries with a fraud and contract suit in New York Supreme Court, accusing the company of wrongfully stripping billions from MBIA Insurance and its investors for top executives’ benefit.

The investors claim MBIA devised a complex scheme to defraud MBIA Insurance’s investors and creditors in the wake of the financial crisis, according to the complaint.

While MBIA Insurance was historically a low-risk municipal bond insurer, during the housing boom it expanded its business by insuring...
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