Insurers to sue Worldwide Weather Trading for fraud
A number of insurance companies have been granted the go-ahead by the Nassau County Court in New York to launch a lawsuit against Worldwide Weather Trading (WWT), alleging the company fraudulently sold weather derivatives policies. The plaintiffs will argue that WWT, which ceased trading in 2000, failed to honour the contracts, which are rumoured to have caused losses in the region of $65 million.
The insurers may have a hard time suing WWT founder, Harold Mollin, as he is believed to have fled to Thailand following the allegations of fraud in 2000. Mollin did not attend a court hearing concerning the lawsuit last month.
In October 2000, Nebraska’s Department of Insurance revoked Mollin’s insurance agency licence. Mollin registered WWT with the Nebraska department, although he ran the business from a New York office. Neither Mollin nor a designated attorney appeared in court.
Speaking on condition of anonymity, one weather trader told RiskNews that Mollin is thought to have fled to Thailand with anywhere between $10 million and $20 million, following the alleged fraud, adding that other WTT employees were not aware of Mollin’s alleged fraud at the time.
In 1999, WWT said it had arranged weather hedges for Major League Baseball's All-Star game as well as tennis' Wimbledon Championships.
The company also set up a consumer-based weather protection web site, RainDay.com, to provide weather protection for the general public to cover both vacations and important occasions, such as weddings. The venture suffered a setback, however, when the Canadian Broadcasting Corporation (CBC) refused to run an advert featuring a Native American leading a group of senior citizens in a tribal rain dance. The commercial was an affront to Native Americans and the elderly, the CBC said.
RiskNews was unable to reach Mollin for comment.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Permanent FRTB reforms seen as vital for IMA adoption
Temporary relief granted in June has done little to encourage internal model use in Europe
How to ensure the next Credit Suisse or SVB fails ‘well’
Regulators are planning changes to resolution rules after criticism that living wills were ignored in previous bank collapses
Asian firms waiting on exemptions from UST clearing mandate
Hoping for relief on extraterritoriality, 51% of Apac firms have yet to start compliance programmes
Already under FRTB, some banks hope for modelling reprieve
Risk Live: BMO and UBS opted for SA, but believe regulators could still opt to follow softer US rules
Regulators better prepared for next Credit Suisse, says SRB head
FSB strengthening guidance on international co-operation, but EU needs more mutual support
From Pillar to Pillar… to post: where now for op risk in Europe?
Experts think enhanced Pillar 2 charge informed by Dora would be more useful than a blunt Pillar 1
PRA struggles to follow Fed’s FRTB modelling moves
Market risk experts say minor differences in US rules add up to more incentives for IMA adoption
Lifeline keeps Europe’s hopes afloat for single-sided reporting
Despite Esma’s proposal for delegated reporting of trades, the industry may yet get its wish