Insurer Sues Level Global Over 'False' Application

Mar 15 2012 | 2:40am ET

Level Global Investors' insurer has sued the defunct hedge fund, accusing it of lying on its 2010 application for a $10 million liability policy.

According to XL Group, Level Global made "false" representations when asked if it was aware of any situation that could lead to a claim. Level Global said no; seven months later, its offices were raided by the Federal Bureau of Investigation. Ten months later, it threw in the towel.

While the once-$3.5 billion firm denied any wrongdoing, a former analyst pleaded guilty last year to passing insider information to others are the firm, and co-founder Anthony Chiasson was charged with insider-trading in January; he has pleaded not guilty.

XL has already paid $7.45 million on the liability policy, which covered the period from April 2010 through April 2011. The insurer sued the New York-based hedge fund, Chiasson, co-founder David Ganek, and three others in New York federal court.

XL is seeking the $7.45 million back, and the rescinding of the insurance policy.

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