PARIS — Artemis, French billionaire François Pinault’s family investment company, and the state of California are reportedly trying to negotiate an amicable agreement in the long, drawn-out Executive Life affair.
Judge Howard Matz has given the two sides until mid-March to come to an accord, and if they don’t, they must go to court on Nov. 3, according to a press report here.
An Artemis spokesman could not be reached for comment.
In late October, an appeals court reportedly threw out a $241 million award won by the State of California. The 9th U.S. Circuit Court of Appeals overturned the award by a lower court judge and ordered a new trial to recalculate the damages Artemis should pay the state. Both Pinault and Artemis were accused of breaking California law when they purchased Executive Life’s valuable junk-bond portfolio from French bank Credit Lyonnais in the Nineties. At the time, California forbade banks from owning insurance firms.
State insurance commissioner John Garamendi sued Credit Lyonnais in 1999, alleging the bank used front companies to buy failed insurance business and its junk-bond portfolio in the early Nineties. Pinault reaped huge profits from the sale of the bonds.
There have been many twists and turns to the case over the years. In February 2005, Matz approved a $600 million settlement the French government had reached on behalf of Credit Lyonnais with California insurance regulators. The jury in May 2005 cleared Pinault personally of any wrongdoing in the case, but found Artemis liable of conspiracy in the way in which the transaction was conducted. However, in July 2005, a Los Angeles jury said Artemis had to pay $700 million in punitive damages for its part in acquiring the Executive Life assets from Credit Lyonnais. Matz dropped that fine three months later, but California was eventually awarded $241 million
Pinault already paid $185 million to the court as part of a settlement in 2003. In a statement, Artemis said that money would be allocated to the current fine, adding the sale of Executive Life to Swiss Re for $240 million would add to its balance.
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