Bermuda Monetary Authority sued by US firm after rejecting business acquisition

(CMR) The Bermuda Monetary Authority and two of its employees are being sued for damages of $25 million in California for allegedly rejecting a U.S. firm's proposed acquisition of Bermuda's Citadel Reinsurance Company.

The BMA, along with Gerald Gakundi, Director of the Insurance Supervision Department at the BMA, and Susan Davis-Crockwell, Deputy Director of Enforcement for the Legal Services and Enforcement Department at the BMA, are defendants in a complaint that was filed on 29 November at federal court in Los Angeles by Newpoint Financial Corp.

According to Offshore Alert, the four causes of action are tortious interference with existing and prospective economic advantage, negligent interference with existing and prospective economic advantage, trade libel, and violation of the Business and Professions Code.

The defendants were accused of “blatant, intentional bad faith malfeasance in denying Plaintiff's Newpoint Financial Corp. application to obtain a controlling interest in a Bermudian insurance company without any, much less good, cause.”

Newpoint applied to the BMA on 16 June 2022 to become a controlling shareholder of a Bermudian insurance company, Citadel Reinsurance Company Limited.

According to Offshore Alert, on 26 July 2022,  Davis-Crockwell sent a letter to Newpoint in Beverly Hills, California, indicating that it was considering objecting or rejecting the transaction.

In court documents filed, Newpoint claims the letter falsely and maliciously claimed the firm was not a “fit and proper person to be the controller of Citadel.” The letter also stated that Newpoint provided information that is not accurate and misleading as to the status of Newpoint's current ownership of other companies. The BMA also claimed that Newpoint is unlikely to comply with directions or other regulatory obligations imposed upon it, and that it fails to meet the “Eligible Capital Rules.”

Newpoint said these statements were false and that the defamatory, malicious, inflammatory, and false statements were not only provided to Newpoint but also third parties through written and verbal publications. This, it said, has caused damage and injury to Newpoint's reputation, goodwill, and ability to conduct existing business and jeopardizes its ability to conduct future business, including its ability to acquire interests in other insurance companies.

Newpoint claims the BMA had predetermined it would deny any application by Newpoint to acquire a controlling interest in Citadel – at least three months before Newpoint even submitted its application.

The firm believes the BMA's prejudicial bias, defamatory remarks, and unfounded allegations stem, at least in part, from a complaint from the Gibraltar Regulatory Authority, which itself was based on unsubstantiated and irrelevant allegations that have since been proven false or have been amicably resolved.

It said the defendants, in bad faith and with malice, refused to examine and consider the overwhelming evidence Newpoint submitted regarding rebutting the false and defamatory statements and spurious conclusions contained in the BMA's objections.

“Newpoint has suffered and will continue to suffer damages due to Defendants' malfeasance, including their malicious, false, and defamatory statements,” court documents stated.