EQUISURE OFFICIALS SUEDPosted On: Sep. 28, 1997 12:00 AM CST
MINNEAPOLIS-Top officials of troubled reinsurance holding company Equisure Inc. produced bogus financial reports in a scheme to artificially inflate the company's stock price, a shareholder lawsuit charges.
A month after Equisure withdrew from the American Stock Exchange in the face of threatened delisting, shareholders filed suit in federal court in Minneapolis charging the company, three of its officials and its outside auditor with securities law violations.
The complaint, seeking class action status, alleges that:
Equisure gave the appearance of cooperating with an AMEX inquiry into its accounting practices while sending the exchange "on a useless chase to Belgium, London and then Monaco in search of financial records which, in actuality, do not exist."
A large part of Equisure's stock was held by insiders whose identities "are hidden behind a series of trust funds and foreign companies." The AMEX, the suit notes, was investigating the possibility that insiders were responsible for most of the trading in Equisure's stock, leading investors to believe there was more interest in the shares than existed.
Equisure insiders profited from their alleged fraud. Former CEO Barrie Harding pocketed about $152,400 selling 10,000 Equisure shares July 31, shortly after the stock hit its peak of $17.13 a share, the suit alleges.
The suit names Equisure and two affiliates; Mr. Harding; Equisure Chairman Peter G. Uttley; Equisure's chief financial officer, who is named in financial filings as David Sachman but who is alleged in an unrelated suit to be jailed insurance executive Paul Yorke-Wade; Minneapolis-based auditor Stirtz Bernards Boyden Surdel & Larter P.A.; and Moores Rowland International, an accounting consortium of which Stirtz Bernards is a member.
The plaintiffs are two investors who bought a total of 1,400 shares for $8.13 to $9.63.
Equisure officials could not be reached. A Stirtz Bernards official declined to comment.