Delay in Maiden whistle-blower dispute
A key hearing in a whistle-blower dispute between the former chief operating officer and general counsel for Maiden Holdings and the Bermudian reinsurer's management has been delayed, The Insurance Insider understands.
The former executive, Bentzion Turin, claims he was unfairly sacked after accusing the reinsurer's largest shareholders of using their powerful position to enrich themselves at the expense of other investors.
But a hearing, trailed in a recent Securities and Exchange Commission (SEC) filing, has been postponed. It is now expected to be heard at some point in the next two months.
It is understood that the hearing was delayed because Edward Rudofsky, a lawyer representing Turin, was taken ill.
Turin claims that Maiden chairman Barry Zyskind and major shareholders Michael and George Karfunkel failed to negotiate a related-party transaction at arms' length in order to seal preferential terms.
The accusations relate to $260mn that the company raised in January 2009 to maintain its A- AM Best rating after it purchased the reinsurance business of GMAC Insurance from Ally Financial.
After the transaction was agreed, Maiden said it would raise the additional capital through an equity rights offering, which would be fully backstopped by the Karfunkels - the wealthy brothers who along with Zyskind own almost 30 percent of the company.
Turin claims that the Karfunkels and Zyskind then met with private equity group Elliot Capital.
He alleges that with no representation of the Maiden board present other than Zyskind - a related party - the terms of a trust preferred offering were agreed instead of an equity rights offering.
Turin alleges that he sought to challenge the terms of the transaction but was told by Zyskind the agreement was "non-negotiable".
Maiden declined to comment but in the SEC filing it said: "The Company believes that it had ample reason for terminating such employment for good and sufficient legal cause, and the company believes that the claim is without merit and is vigorously defending this claim."