For the second time in nearly as many months, another lawsuit tied to the collapse of New London Security Federal Credit Union has been dismissed.
This time around, a suit filed by Wells Fargo Advisors LLC was recently dismissed by a Connecticut federal district court judge for failure to demonstrate a right to indemnity or contribution.
According to its complaint, Wells Fargo sued several former New London board members alleging negligence by Edward Rachleff, the financial adviser who allegedly mismanaged the credit union’s investments.
Rachleff was also an investment broker with A.G. Edwards & Sons Inc., which later merged with Wachovia Securities and then Wells Fargo. He committed suicide on the same day the NCUA liquidated New London in 2008.
U.S. District Senior Judge Warren Eginton said a state statute on joint liability in third-party negligence that Wells Fargo presented in its case did not apply because all alleged losses are purely commercial in nature.
In September, it was announced that a lawsuit filed by five members of New London was dismissed by a federal court because the plaintiffs failed to file their suit within the six-month deadline window after the NCUA board denied their initial administrative claim. The members alleged that New London board members, staff and the CU’s accounting firm, among others, had been negligent.
The NCUA had previously filed lawsuits against Wells Fargo and the CU’s auditing firm, Beller Shepatin, for professional malpractice for allegedly failing to detect fraudulent activity.