In a new statement, under-fire insurtech Vesttoo has said that it confirms the source of the fraud experienced, to do with invalid bank letters of credit (LOCs), is external to the company, with no current employees under suspicion.
Responding to the news that the firm’s bankruptcy filing has removed the temporary restraining order that froze its bank accounts, Vesttoo said, “Vesttoo can confirm that the federal court in New York has removed the temporary restraining order freezing the company’s accounts on the 15th of August, and the Aon White Rock legal case was placed on the court’s suspense docket.
“The courts in Israel have followed suit, removing the temporary restraining order from the company’s accounts in Israel as well.
“The proceedings moving forward will fall under Chapter 11, which is aimed at providing the company with the ability to restructure the business and rebuild while pursuing legal action.”
As we reported earlier today, the move to file for Chapter 11 bankruptcy protection has resulted in the legal action being pursued against it by broker Aon’s segregated account and transformer company White Rock Insurance SAC being halted and the temporary restraining order being removed.
Vesttoo has also stated, “We can also confirm that the investigation into the fraudulent LOCs used as collateral in the company’s transactions is in advanced stages, and the company hopes to be able to publish results in the near future.”
We’ve been calling for this, as it is the only way the insurtech can move forwards, if it can point to external drivers as the source of any fraud that has occurred.
Vesttoo said, “What we can already confirm is that the source of the fraud is external to Vesttoo, and no employees of Vesttoo UK, US, Bermuda, Japan, or other jurisdictions outside of Israel are under any suspicion of being involved in the fraudulent activities.
“We can firmly assure that Vesttoo’s remaining core team of professionals is free of any suspicion, and our company continues to operate because of these talented individuals.
“We unfortunately had to let many talented people go from the company, in Israel and in other territories, as a result of the damage caused. These steps were taken only to secure the financial viability of the company and not as a result of the findings.”
As a previous statement by the insurtech’s new interim CEO had said that a small number of now removed employees may have had a connection to the fraud that has occurred, it appears this new statement is really focused on current employees and the fact none of them are under suspicion.
But, we understand that the vast majority of the employees Vesttoo has already fired are also clear from any suspicion, but a handful may be suspected still.
Publishing the results of its own audit and investigation into the fraud is likely the only way Vesttoo can secure a route forwards, so clarity looks like it may be coming in the not too distant future, which will also help the market in understanding what occurred and how this whole episode has happened under the watch of so many parties in the reinsurance risk transfer chain.