The Bermuda Monetary Authority and two of its employees are being sued for damages of $25 million by a Delaware-domiciled company over allegations relating to its application to acquire a controlling interest in Bermuda’s Citadel Reinsurance Company Limited.

The suit, filed in California by Newpoint Financial Corp and reported by the OffshoreAlert website, names the BMA and staff members Gerald Gakundi and Susan Davis-Crockwell as defendants.

The BMA is the island’s financial services regulator.

Mr Gakundi serves as the director of insurance supervision at the BMA. Ms Davis-Crockwell is the deputy-director for enforcement.

The complaint sets out the causes of action as tortious interference with existing and prospective economic advantage, negligent interference with existing and prospective economic advantage, trade libel, and violation of the California Business and Professions Code. It also seeks injunctive relief.

The plaintiff, which stated that its principal place of business was in Beverly Hills, said the action arose from the defendants’ “blatant, intentional bad faith malfeasance in denying plaintiff’s Newpoint Financial Corp application to obtain a controlling interest in a Bermudian insurance company without any, much less good, cause”.

Newpoint said that it applied to the BMA on June 16 to become a controlling shareholder of Citadel. It claims that a contractual agreement in principle existed between the Citadel Group and Newpoint regarding such interest.

The plaintiffs claim that the BMA wrote to Newpoint on July 26 “indicating that it was considering ‘objecting’ to the transaction, the objection being the functional equivalent of rejecting the transaction”.

They further allege: “The letter falsely and maliciously claimed that Newpoint was not a ‘fit and proper person to be the controller of Citadel’.”

In the letter, Newpoint claimed, the BMA said it had received “information from regulators in multiple jurisdictions” that “Newpoint … provided information which is not accurate and is misleading as to the status of Newpoint’s current ownership of other companies”.

Further, the complaint states, the BMA letter said “that Newpoint is unlikely to comply with directions or other regulatory obligations imposed upon it”, and that Newpoint failed to meet the “eligible capital rules”.

The complaint said each of the statements “were and are demonstrably false”.

The plaintiff claimed that it rebutted the letter’s contents in a letter dated August 19.

The complaint said: “Newpoint also pointed out that the BMA had conflated Newpoint with other companies containing Newpoint in their names.”

The plaintiffs claim that the BMA wrote to Newpoint on September 30, rejecting the company’s application.

The complaint alleges that “the defendants doubled down on their malfeasance, again falsely conflating Newpoint with other entities, and vaguely accusing those companies’ directors and controllers, Keith Beekmeyer and Andrew Bye, of vague misconduct that allegedly supported the BMA’s bad faith denial of Newpoint’s controlling shareholder application”.

Newpoint further claims that the BMA wrote to Citadel in March, saying that it had “significant concerns on the fitness and propriety of Newpoint as a proposed shareholder controller” and that it had “concerns that some of the material [provided] included inaccurate, false, and misleading information”.

The complaint alleges: “Indeed, upon information and belief, the BMA had predetermined it was going to deny any application by Newpoint to acquire a controlling interest in Citadel – at least three months before Newpoint even submitted its application.”

It added: “Newpoint believes defendants’ prejudicial bias, defamatory remarks, and unfounded allegations stem, at least in part, from a complaint from the Gibraltar Regulatory Authority, which itself was based on unfounded and irrelevant allegations that have since been proven false or have been amicably resolved.”

On the Newpoint Financial Corp website, it is described as a “global-focused diversified financial services holding company”.

Under “leadership team”, Mr Beekmeyer is described as a founding shareholder, the CEO and a director of Newpoint Capital Ltd, a UK company.

Mr Bye is described as a founding shareholder of Newpoint Financial Corp, holding the position of chief risk officer and director, as well as being a director in Newpoint Capital Ltd and Newpoint Indemnity, holding responsibilities including risk and operations.

In response to an inquiry by The Royal Gazette, the BMA said: “The BMA has been made aware of this development through media sources and we have no comment at this time.”

See the complaint in related media.

Download PDF File

Newpoint Financial v. BMA et al - Complaint.pdf